See how inflation erodes the purchasing power of your money over time — and how much you need to invest just to stay ahead.
| Year | Nominal Value | Real Value (Today's $) | With Investment |
|---|
Inflation is the rate at which the general level of prices for goods and services rises over time, reducing the purchasing power of money. At just 3% annual inflation, $10,000 today will only buy what $5,537 buys today in 20 years — a loss of nearly half its purchasing power.
This is why keeping large amounts of cash long-term is risky: money sitting idle loses real value every year. Investing in assets that grow faster than inflation — like index funds — is essential to preserve and grow wealth.
At 3% inflation, prices double roughly every 24 years. What costs $100 today will cost $180+ in 20 years.
The S&P 500 has historically returned ~10% nominally, well above long-term average inflation of ~3%.
A 7% investment return with 3% inflation = ~4% real return. Always think in inflation-adjusted terms.