In many cases , savers who do not want to take risk , liquidity stored , without realizing that that is a risk in itself by the corrosive effect of loss of purchasing power .
Wealth is not measured by the money you have, but by the goods and services you can buy with that money. Probably 1 € today , like $ 1 in the next 25 years lost more than 35 % of its purchasing power.
That's why we invest money becomes a necessity if we want to preserve our wealth and purchasing power to the future. In other words , if you invest for risk and leave your money in a bank or under the mattress for the long term , what you're really doing is an investment that you are generating losses.
The objective of savers is to preserve their wealth , while the goal of investors is to preserve their wealth and look the same growth . They may seem like two different goals , but the first is the necessary condition for the second , and the second is the necessary condition to take effect the first .
Maybe in periods of moderate inflation can ignore this factor , but in the long run, inflation remains the most persistent goal of preserving wealth and growing threat.
How to fight inflation?
For short stay not always calculated annual inflation of 2.5 %. That is the minimum annual return you should get for your money saved. Some people want to take more risk , while others are not prepared for it, so a 2.5% we can still get in fixed income (bonds, deposits , etc ...)
However, always remember that in exchange, if we invest for the long term in stocks that pay good dividends , the dividend would be our fighter to beat inflation
Whether we invest in fixed or variable income , compound interest is the most important part of our strategy to grow our wealth, and therefore , our purchasing power
To get an idea , if when we speak of compounding we are saying that a small amount of money, with a modest profit over time can turn into a fortune , because inflation is exactly the same but in reverse , where a large fortune , with a modest loss of purchasing power over time, can make you lose much of your funds , given that money is just paper , and what counts is the amount of things you can buy with that role
Again, never ignore the erosion of inflation , however insignificant it may seem to you