Savings and inflation
Savings as a means for growing wealth
The simplest type of investment is through a savings or fixed deposit account, which involves putting your money into a bank account. Your bank then pays you regular interest. Cash investments like these are generally safe and easily accessible. It is important to keep some cash savings for short-term and emergency needs.
But while you receive interest on cash savings in the bank, the amount is often less than the current rate of inflation. If the interest rate does not exceed the rate of inflation, the actual worth of your savings depreciates over time. You may find your financial goals end up being out of reach.
It is therefore important to invest in other ways. By taking sensible risks, you stand a better chance of generating returns that can counter the impact of inflation. You can also compound your returns by reinvesting earnings generated from your investments.