Many of us have money in a bank account, savings account, wallet, or maybe under a pillow.
But did you know that this money can lose value? Let’s take a look on what inflation is and how it works.
Definition of inflation
In general, inflation is defined as an increase in the general price level of goods and services over a period of time. Alternatively, we can say that this is a reduction in the purchasing power of money. So in the example, we can buy less food at different times for the same amount of money. Imagine what you can buy for 1 USD thirty years ago and today.
Rate of inflation
Another widely used term is the rate of inflation. The rate of inflation is measured using price indices.
The average annual inflation rate is expressed by the increase in the average annual consumer price index. It therefore expresses the percentage change in the average price level over the last 12 months. It is therefore an annual figure.
How to protect yourself from inflation
From the above, it can be easily deduced that if you collect money “under the pillow”, they can lose value very quickly. It is not good to just put all your money away like that.
If you don’t want your money to lose value completely, you need to let it work. Again, we are talking about investment. Cryptocurrencies are one of the protections against inflation that people are now widely using around the world.
It has been said many times here that you need to be careful when investing. Always invest only as much as you can afford to lose, this is the golden rule of investment. Diversify your investments in various assets. Always check everything, set a strategy and if you are unsure, consult experts.
There are many tools to invest. And many opportunities. But not all of them are profitable and sometimes it is possible that it is a scam. Therefore, you always need to be careful and find out enough information before you decide to invest your money.