BCRypto
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Given the increasing interest rates, many people may wonder whether it is better to invest or save their money. It is important to understand that banks offer interest rates on savings accounts as a means of making a profit on customers' deposits. However, in many countries, banks invest these deposits in other projects to generate higher returns.
While saving money in the bank may be less volatile than investing, it has historically been a losing game compared to investing. The US stock market, for example, has historically provided returns of around 10% (6.5% after inflation), while cash typically returns only 1% or 2% above inflation.
However, with interest rates currently low or even at 0% in many developed countries, and consistently below inflation in many developing countries, there is now an absolute loss to inflation when saving money in the bank. This loss compounds over time, resulting in significant losses over the years.
Therefore, people should consider putting their money to work by investing in assets such as stocks, digital assets, and private businesses. Despite the volatility of assets, over time, they tend to generate higher returns than wages and cash in the bank, which is one of the biggest drivers of inequality according to Thomas Piketty's book Capital in the 21st Century.
While cash can provide a cushion in case of unexpected emergencies, it is not an investment and does not generate returns. People should not fear volatility and should instead focus on the long-term growth potential of assets.
While saving money in the bank may be less volatile than investing, it has historically been a losing game compared to investing. The US stock market, for example, has historically provided returns of around 10% (6.5% after inflation), while cash typically returns only 1% or 2% above inflation.
However, with interest rates currently low or even at 0% in many developed countries, and consistently below inflation in many developing countries, there is now an absolute loss to inflation when saving money in the bank. This loss compounds over time, resulting in significant losses over the years.
Therefore, people should consider putting their money to work by investing in assets such as stocks, digital assets, and private businesses. Despite the volatility of assets, over time, they tend to generate higher returns than wages and cash in the bank, which is one of the biggest drivers of inequality according to Thomas Piketty's book Capital in the 21st Century.
While cash can provide a cushion in case of unexpected emergencies, it is not an investment and does not generate returns. People should not fear volatility and should instead focus on the long-term growth potential of assets.
