Compound Interest vs. The Inflation Monster: How to Keep Your Wealth

The $100 Hamburger

Imagine it is 1990. You have $100. You can buy about 40 Big Macs.

Imagine it is 2026. You have that same $100. You can buy... maybe 12 Big Macs.

You didn't "lose" money. You still have a $100 bill. But you lost Purchasing Power.

This is inflation. And it is eating your savings alive.

This is the most important concept in investing.

• Nominal Return: The number on the screen. (e.g., "My stock went up 8%!")

• Real Return: The number after inflation.

If your savings account pays 5% interest, but inflation is 3%, your Real Return is only 2%.

If your savings account pays 0.5% (hello, big banks) and inflation is 3%, your Real Return is -2.5%.

You are safely losing money.

The Rule of 72 is a mental math shortcut to estimate how long it takes for an investment to double.