In daily life, many people think that putting money in the bank is a safe and secure way of financial management. However, from the perspective of asset preservation and appreciation, whether money deposited in the bank can resist the erosion of inflation is a question worthy of in-depth discussion.
Inflation means that the overall price level continues to rise, and the purchasing power of money decreases accordingly. Simply put, the same amount of money can buy fewer goods and services under inflation. The commonly used indicator for measuring inflation is the Consumer Price Index (CPI). If the bank deposit interest rate is lower than the CPI increase, the actual purchasing power of the deposit will decrease, which means that the money in the bank has not outperformed inflation.
- Low interest rate:
Compared with other financial products, bank deposit interest rates are often relatively low. Especially in the current low interest rate environment, the yield on deposits cannot even keep up with the pace of inflation, and may actually lead to the depreciation of funds.
- Inconvenient withdrawal of large amounts:
Usually, it is necessary to notify the bank in advance to withdraw a large amount of deposits, which may cause inconvenience in the case of urgent need for funds
- Deposit insurance limit: Although bank deposits are protected by deposit insurance, if the limit is exceeded, once the bank is at risk, the excess amount will not be fully guaranteed
- Easy to embezzle:
Bank deposits are flexible and withdrawals are convenient. It is naturally difficult to really save money if you withdraw money at will. This is why many young people shout that they can't save money all year round. After all, a piggy bank with a "hole" at the bottom is difficult to resist the temptation of human nature for instant satisfaction.
- Mixing of funds:
Many people manage family assets with one or two bank cards, but do not manage them in separate accounts. This easily leads to us mixing up all the money we want to use for any matter in the future.
- Explicit assets:
This is actually something most people don't think of. When "specific circumstances" occur, the money in the bank can be checked and controlled for the first time. For high net worth people, the privacy of funds is often not well protected.
In addition, the economic environment is complex and changeable, and the inflation rate is not fixed. In some special periods, such as when the economy is overheated or encounters major events, inflation may intensify. If the bank deposit interest rate cannot keep up with the pace of inflation in time, the money in the bank will face the risk of depreciation.
However, bank deposits also have their irreplaceable advantages. It has extremely high security, there is basically no risk of loss of principal, and the liquidity is relatively good, especially the current deposits can be withdrawn at any time. For people with low risk tolerance and the pursuit of stable funds, bank deposits are still an important financial management choice.
Money in the bank may not necessarily outperform inflation. Investors need to consider a variety of investment methods and reasonably allocate assets according to their risk preferences, financial conditions and financial management goals to achieve asset preservation and appreciation.
