Devaluation.
Keeping your money in a bank account means you can access it when you need to, but did you know that it also means you have a lot of money sitting in one place (increased risk), losing value over time.
How is your money losing value over time???
Consider this…. If you have $1000 in the bank and the bank gives you 0.01% interest for the year, that means that you will have $1000.10 at the end of the year right?
WRONG!
You forgot about the increase in the cost of living.
Let’s say that in a particular year the cost of living goes up 7%.
Your $1000 and 10 cents is actually worth $930.09, in terms of buying power.
And that is not taking inflation in account which would reduce the value of your $930.09 even further.
Inflation occurs when a nation’s bank prints more money. This causes the money already in circulation to have less value.