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Investing is a crucial element of wealth-building, yet it can feel daunting. There’s much to grasp, an initial commitment to make, and ongoing concerns about the risks involved. If you've been delaying for these reasons, think about the impact of inflation on your savings.
At Get Rich Slowly, guest writer Suba Iyer highlights the importance of starting your investing journey now, with inflation being one of the primary motivators:
Inflation is a reality you can't ignore. Keeping your funds in a standard savings account and hoping not to lose value means you'll need much more in savings to build a decent nest egg. Don’t delay your investing journey. Plenty of blogs break down the essentials in a straightforward way. If investing isn’t for you, consider a target date fund and let it grow on its own.
With the current inflation rate at 1.7 percent, and the average for the decade around 2.3%, if your savings are sitting in a money market or traditional savings account, your interest earnings are likely under 1%. Over time, your money’s purchasing power erodes. This might seem minor now, but as you approach retirement, the impact could be substantial, causing a noticeable decline in your savings.
Bankrate's inflation calculator allows you to quantify the impact of inflation. Simply input your data to see how your savings measure up with and without inflation. You can even factor in the expected return from investing to get a clearer picture.
The key takeaway: while investing might feel daunting, it's crucial to counteract inflation’s effects. The sooner you start, the better it works to your advantage. Visit Get Rich Slowly for the full post with more insights.
Photo credit: Dave Barger
