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goji.go goji.go
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11 years ago
Is it possible to have money in a savings account and actually lose purchasing power in the long run?
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Diesel

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wrote...
#1
11 years ago
Simple answer yes. Long answer, let's say you have an savings account with 1% interest. That sounds nice. Per $100 bucks you are essentially making an extra dollar per year. But let's also say inflation of the economy is 1.2%. Basically that means the interest rate is not keeping up with the inflation meaning you are actually losing value over time, but usually very little. So that $100 a year ago may actually be worth more than the $101 today because you would need to have $101.20 to match the $100 a year ago.
bbb
wrote...
#2
11 years ago
Yes. It all depends on the interest rate you earn and the amount you pay in taxes, plus the effect of inflation. Let's say the interest rate is 3% and the inflation rate is 4%. You're losing 1% per year right there, plus whatever you have to pay in taxes on the interest.
goji.go Author
wrote...
#3
11 years ago
Thanks Smiling Face with Open Mouth
Diesel
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