1. Savings erode if you’re not investing
Number1411 / Shutterstock.com
If your money isn’t growing, it is losing purchasing power to inflation, the rising of prices over time. For instance, you’d need $300.52 in October 2018 to buy the same stuff you could get for $100 in October 1980, according to the U.S. Bureau of Labor Statistics’ inflation calculator.
The Federal Reserve has a goal of maintaining a 2 percent inflation rate. If the Fed is successful, your savings must earn a minimum of 2 percent a year just to retain the full value over time.