Economics Made Economical

Tip of the Day #3: Interest vs. Inflation

When investing money to profit off of the interest, make sure the interest rate you’re getting is higher than the average rate of inflation. Otherwise you’ll only end up having a larger sum of money in the future that’s worth less than your current money is worth right now.



  1. Very true most investors do not consider the impact of inflation on their savings/investments
    for example in Kenya with an annual inflation rate of about 12.5 pct what is the Gain of putting in your hard earned income in a bank’s savings account that offers 5pct per return on savings.
    basically your savings are growing at -7.5 pct per

    • Exactly, the banks have too many of the people fooled. I remember seeing a chart comparing interest & inflation rates by year for the U.S. It went back to around 1970. Basically every year had higher inflation than interest. A trick can be to find long-term investments or something like CD’s which have a guaranteed rate and it’s usually higher than regular bank accounts. Thanks for the comment.


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