The quiet tax
Inflation is the general rise in prices over time. At 3% annual inflation, money loses roughly half its purchasing power in 24 years. Cash sitting still isn't standing still — it's drifting backward.
Nominal vs. real returns
A 6% investment return during 3% inflation leaves roughly 3% of real growth — the part that actually buys more stuff. This is why long-term plans must clear the inflation hurdle, and why projections that ignore inflation flatter the future.
What you can do
- Keep short-term money safe and accessible, even though inflation nibbles it.
- Give long-term money a chance to outgrow inflation through productive assets.
- Revisit plans when inflation shifts — fixed assumptions age badly.
- Focus on what you control: how much you save, for how long, at what cost.