What is inflation? Inflation is the decline of buying power of any given currency over time. 

Remember that candy that you used to get for .50 cents when you were a kid? Well, remember that same candy now, only smaller and costing $1.00. That is inflation! 

The optimal inflation rate is considered to be around 2%, but a lot of countries try to target +/-1 of that 2%. 

The main point is that if the country is doing well, inflation will continue making your money worth less and less each and every year. 

Where you put your money will either help or hinder you from beating this inflation. 

If you are the person who puts their money under the bed because you don’t trust the banks, well, unfortunately your money is only  becoming worthless over time. It might just act like a fire starter if something bad were to happen. 

Then, we have savings accounts, generally used for long term storage. The best rate I was able to find at the time of this post was Synchrony Bank with a high yield savings of .60% APY. That’s way under the 2%, there’s no way your money will beating inflation sitting in a savings account. 

Another form is CD (certificate of deposit). The best rate I was able to find was from First National Bank of America at their best rate of 1.10% for an 84month (7 year). That rate isn’t beating inflation in any way and on top of that you’ll have to tie up your money for a really long time. 

Now, stock market/dividend accounts  provide the best return on your money, but they are not considered a “savings account” because your money has a chance of being lost. If you do put your money in the right stocks (dividend stocks), not only will you see market gains but income gains that both beat out inflation. The tax rate on this income is also lower because the interest from savings accounts is taxed higher. (I will be talking more about this is a upcoming post) The money may not be as easily available but you can pull it out if necessary.  

Where you put your money is up to the saver because each type of savings account can be used for different things. I believe high yield savings accounts are a good place to put emergency funds because you can get access to funds fairly easily if something unforeseen were to occur. CDs, I can see being used if you need to put money for a purchase that you want to make later on down the road due to the fact that you can’t touch the money until the maturity date.  

Personally, for me dividend accounts are the best financial strategies you can use to overcome inflation, being that lots of very strong stocks pay out dividends that have yields that are over 2%, so the income that you are acquiring is greater than what you would be losing out to inflation. Giving you a net positive income.

In the end we need to make sure that we make the most out of the money that we have not just for today but for the days to come.

As always, have a great day and keep learning and moving towards your goals, never stop pushing!