DayCents

Inflation

Inflation is the gradual rise in prices that erodes the purchasing power of money over time — a dollar buys less each year. Even a modest 3% annual rate roughly halves what your cash is worth over 24 years, which is why keeping long-term money invested matters.

The Federal Reserve targets about 2% inflation as a sign of a healthy economy. It's the quiet reason a 'safe' pile of cash loses ground: to preserve purchasing power, your money needs to earn at least the inflation rate, and to build wealth it needs to beat it.