Inflation Ate My Homework (And How To Stop It!)

Hi all,

Watching your cash savings climb in your bank account?

It’s so satisfying, to see that little number climb.

Too bad it’s not the best use of your money.

That’s right folks! You heard it here first.

I should probably give you an explanation, hey?

Stacking your money up in cash savings is a bad mistake.

And it’s a common one too!

Now don’t get me wrong — you need some cash savings.

An emergency fund is key in case anything happens.

But that’s about 3-6 months of funds to cover those expenses.

Maybe a touch more if you want to air on the side of caution.

But if you want to get the most bang for your buck — it sure as hell isn’t happening in that savings account of yours.

Our old friend inflation comes into play here.

Let’s say your bank is giving you 4% p.a. interest on a term deposit. 

So your $100 savings would become $104.

Until you realise that the inflation rate is around 7% currently.

So you’d lose $7.28 in value.

Your $104 is really $96.72.

It’s annoying, I know.

Ok, so what do we do instead?

Where else can you get a better return on your savings?

Somewhere other than a bank account.

I present to you: the share market.

The average rate of return? 

8.1% p.a. based on ASX 200 over 20 years

A lot better than the 4% right?

So if you don’t plan to use those savings for quite some time and you are willing to take on some risk, this could definitely be an avenue for you to explore!

So if you are an intense saver, I hope this has given you a new perspective!

Sometimes we have been doing something for so long that we don’t question it.

But hey, times change! Back in the day, that was just what everyone did and it worked in their favour.

But the world we live in is very different to that of 20-30 years ago.

And we gotta change with it if we want to keep up.

Let me know if this inspires you to look into ETFs and index funds.

It’s time to make your money work for you, rather than the other way around.

Until next time.

Steve

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PS: Whenever you're ready, there are three ways I can help you…

1. If you ever want to get some 1:1 help with your personal finances, we can jump on the phone or on Teams for a quick clarity call and find out where you are right now, where you want to be with your money and lifestyle, and if we can help or not. 

We can then make a roadmap for the next best step for you to take to get closer to your financial independence.

👉 calendly.com/steve-lwg/15-min-clarity-call  

2. Dread tax time? Don’t feel like you are maximising your tax return? Have no idea what you can claim?

Many Australians miss out on thousands of dollars all because they aren’t engaging the right accountant to help them.

Email Gerleen and get the most out of your tax return this year and put some money back into your pocket.

👉 gerleen@linkwealth.com.au

3. Did you know that every year, Australians are paying their bank thousands of dollars more than they need to on their mortgage?

Many folks don’t realise they’re sitting on home loans year after year that are not the best fit for their situation. 

If you want to know if this might be you, book a free 15-min call with our mortgage broker Eddie and he can make sure you’ve got the best loan for your situation

👉 calendly.com/eddie-link/15-min-clarity-call