Why your money buys less every year and how to protect it.
Inflation is the gradual increase in the price of goods and services over time, which results in a decrease in the purchasing power of your money. Imagine you have $100 today. If inflation is at 3%, next year that same $100 will only buy you $97 worth of goods. Over 10 or 20 years, this effect compounds drastically, potentially cutting your real wealth in half without you losing a single penny from your bank account. It is often called the 'silent tax' because it erodes your savings without a visible transaction.
A quick way to estimate how long it will take for your money to lose half its value is the Rule of 72. Divide 72 by the inflation rate. At 3% inflation, your money's value halves in 24 years (72 / 3 = 24). At 6%, it only takes 12 years! To fight this, you cannot simply keep cash under the mattress or in a low-interest savings account. You need to invest in assets that historically outpace inflation, such as stocks, real estate, or inflation-protected securities. This tool helps you visualize that erosion so you can take action today.
Visualize how inflation erodes your purchasing power over time.
