Saving Money is Losing You Money in 2020

Savers are losers in this interest rate environment. Yes, keeping your money in the bank is losing you money every day.

Being able to save money has always been considered a positive thing and a sign of maturity and discipline.

However, in this interest rate environment and the way that interest is taxed, most savers are actually losing purchasing power due to inflation.

Inflation is a stealth tax that many people don't know about, or care to understand.

For Example, let's say you have your money saved in an account earning a 1% yield. However, if the price of all goods has gone up by 2% ( measure by CPI aka the Consumer Price Index), then you are actually LOSING 1% a year due to inflation.

When your employer gives you a 2% raise, but the CPI index has gone up by 2.5%, you actually took a 0.5% pay CUT!

Interest Earned In Savings Accounts is also Taxed. The money you earn is taxed at your income tax bracket (22%, 24%, etc.).

So instead of making the 1.5% in your savings account, it's more realistically closer to 1.17%. This is obviously not even keeping up with inflation. Again, saving money is actually losing you money!

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