Money Control Place
  • Politics
  • Business
  • Stocks
  • Investing
  • Politics
  • Business
  • Stocks
  • Investing

Money Control Place

Business

Savings simulator: Is your money beating inflation?

by October 9, 2023
October 9, 2023
Savings simulator: Is your money beating inflation?

Walk past any bank and you’ll likely see savings rates advertised in the window.

That’s because, for the first time in many years, rates have climbed to 5% on some high-yield savings accounts. Much the same goes for other common financial products, like certificates of deposits (CDs) and money market funds, as the Federal Reserve has boosted interest rates to 20-year highs.

But there’s a catch.

“At the end of the day, there is no free lunch,” said Lauren Goodwin, economist and director of portfolio strategy at New York Life Investments. “If money market or cash-like yields are higher, it’s likely because inflation is higher.”

Last year, consumer prices jumped at rates unseen since the 1980s, swiftly eroding the purchasing power of each U.S. dollar. To attract and keep depositors in this environment, banks have been dangling juicier returns.

For example, a $1,000 investment in a typical “high-yield” savings account in January 2021 — when inflation started picking up — was paying just 0.7% in annual interest at the time, according to Investopedia data.

Then, as the Fed ratcheted rates higher to combat inflation, the rate on that same account surged to 5% by early 2023, delivering much more generous returns. As the interest compounded, that initial deposit would have grown to $1,059.72 as of this August, for a gain of $59.72 on paper.

But that’s before adjusting for inflation. In reality, that balance is worth only $902.86 in 2021 dollars — a $97.14 net loss in purchasing power.

Some investment strategies have done a better job cushioning the blow from inflation — or even beating it — than others. But as the track record of even a high-yield savings account shows, it hasn’t been easy. Try out our simulator to see for yourself. Just pick an initial investment value to explore how three common financial products’ returns compare with stashing cash under the mattress. Then hit “Apply Inflation” to see how those current-day balances look in 2021 dollars.

This post appeared first on NBC NEWS
0
FacebookTwitterGoogle +Pinterest
previous post
Follow the Smart Money; Technology and Homebuilder Stocks Loved Last Week’s Reversal in Bond Yields
next post
Sex, Signal messages and sabotage: SBF’s top execs and Bahamas roommates tell all in court

Related Posts

Bucking trend, McDonald’s vows no egg surcharges as...

February 27, 2025

Thousands of Southern California hotel workers begin strike

July 3, 2023

Trump Media tells shareholders how to block their...

April 20, 2024

Dick’s Sporting Goods is latest retailer to forecast...

March 12, 2025

FTX lawyers accuse Sam Bankman-Fried of financing his...

July 25, 2023

Nvidia’s CEO did a Q&A with analysts. What...

March 22, 2025

Why Trump’s iPhone tariff threat might not be...

May 25, 2025

Google forcing some remote workers to come back...

April 24, 2025

Homeowners in states hobbled by extreme weather are...

June 18, 2023

Planet Fitness shares sink after board ousts CEO...

September 18, 2023

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Latest

    • Run Your Stock Portfolio Like a Pro Sports Team

    • Leadership Rotation Could Confirm Corrective Phase

    • Breakouts, Momentum & Moving Averages: 10 Must-See Stock Charts Right Now

    • 1911 Gold Temporarily Suspends Operations at True North Complex due to Bissett Evacuation Order

    • Ontario Backs Down on Key Bill 5 Provisions, Echoes BC’s Mining Debate

    • Appeals Court Grants Trump Temporary Reprieve on Tariffs, “TACO” Taunts Gain Steam

    Categories

    • Business (1,223)
    • Investing (2,503)
    • Politics (3,699)
    • Stocks (1,614)
    • Uncategorized (20)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: MoneyControlPlace.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 moneycontrolplace.com | All Rights Reserved