5.4 Inflation, again!
The interest received on savings is good as it makes your money grow. Unfortunately, inflation works in the opposite direction as it reduces the purchasing power of your money.
If interest rates are lower than the inflation rate, then over time your money in a savings account will lose value.
This happens because, even though your savings will earn interest, the prices of goods and services will increase by a higher percentage than the interest rate that you will earn on your savings.
Quiz
a.
True
b.
False
The correct answer is b.
a.
True
b.
False
The correct answer is a.
a.
True
b.
False
The correct answer is a.
a.
True
b.
False
The correct answer is a.
Moving on
When you are ready, you can move on to Session 6: Understanding the stock market [Tip: hold Ctrl and click a link to open it in a new tab. (Hide tip)] .
5.3 Interest rate compounding
