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.

Formula: 72 / Interest Rate = Years to Double

• At 2% return: 72 / 2 = 36 Years to double.

• At 7% return: 72 / 7 = 10.2 Years to double.

• At 10% return: 72 / 10 = 7.2 Years to double.

It works for debt and inflation too.

If inflation is 4%, your money loses half its value in 18 years (72 / 4).

You cannot beat inflation with a savings account. You need assets that appreciate or pay dividends.

1. Stocks (Equities): Historically return 7-10% (Nominal) or 5-7% (Real).

2. Real Estate: Generally keeps pace with inflation + cash flow.

3. Treasury TIPS: Government bonds explicitly linked to inflation.

We built an Investment Calculator that doesn't just show you the big "Nominal" number (which looks impressive but is misleading).

It has a "Real Value" toggle.

Turn it on, and you will see what that future million dollars is actually worth in today's buying power.

It is often shocking. But it is better to be shocked now than when you retire.