Inflation Can Eat Away at Your Savings

Even having the Federal Reserve’s strategic moves, the U.S. economy (and other fields as well) is still being affected by the COVID-19 pandemic.

Let’s say you have $200 in your savings account that pays a 1% interest rate. After one year, your account will earn 1% interest so you’ll have $202. Now let’s have a look at the rate of inflation in the U.S. The April data shows it’s running at 8.3% so as long as your savings don’t grow at the same rate as inflation, you will clearly lose money.

Many retirees living on a fixed income stream are definitely overpowered by this current economic situation. To fight against inflation’s effects, financial planners suggest investing, but they also point out to choose investments that are fitting your risk tolerance.

Investing in Treasury Inflation-Protected Securities, or TIPS, can help you combat inflation’s effects. Or maybe you want to risk a little bit more by investing in real estate. Either way, keep in mind that having 65 years or more doesn’t mean you can’t or you shouldn’t invest money.