Inflation is a silent cost
Money sitting in cash doesn't lose dollars — it loses value. If prices rise 3.5% a year, something that costs 100 today costs about 141 in ten years. The same logic runs in reverse for savings: the cash you hold buys a little less each year. This is why keeping long-term money entirely in cash is risky in a different way than investing.
Beating inflation
To preserve buying power, your money generally needs to earn at least the inflation rate. Use the Compound Interest calculator to see what return is needed, and the FIRE calculator to plan long-term goals in inflation-adjusted terms.
Frequently asked questions
How does inflation affect my money?
Inflation means prices rise over time, so the same amount of money buys less. A fixed sum left in cash loses purchasing power every year even though the number stays the same.
What inflation rate should I use?
Many central banks target around 2% per year, but real rates vary by country and period. Use your country’s recent average, or run a few scenarios (e.g. 3%, 5%, 7%) to see the range.
What is the difference between the two results?
"Future cost" shows how much you’ll need later to buy what costs your amount today. "Future purchasing power" shows what today’s amount will actually be worth later if you don’t grow it.
Last updated: June 2026