The setup
You put $10,000 in a checking account. The number stays at $10,000. Thirty years later, you still have $10,000 — at least on paper.
But $10,000 in 1995 bought about twice as much as $10,000 today. That’s not a market crash, that’s not a bank fee. That’s just inflation, quietly compounding in the wrong direction.
Inflation 101
Long-run US inflation runs around 3.1% per year. That sounds small. Over 30 years, it almost cuts your purchasing power in half.
The formula is the same as compound interest, just running the other way: real value = nominal ÷ (1 + inflation)^years. A “safe” pile of cash quietly loses ground every single year.
After 30 years, your $10,000 buys $4,648 of stuff.
Adjust the inputs to see the damage at different rates and horizons.
- Nominal balance
- $11,614
- Real value
- $4,648
- Lost to inflation
- $6,966
- vs comparison
- —
“But I have a high-yield savings account”
HYSAs in 2024–2026 pay 4–5% APY, which actually beats inflation. Enjoy that while it lasts — it’s a side effect of fast Fed rate hikes, not the long-run norm. Across decades, real returns on cash hover around zero.
HYSAs beat checking accounts. They don’t beat the market over long horizons. Flip the comparison toggle above to see the gap.
What to do instead
The fix is owning assets that grow with (or faster than) inflation — broad index funds, real estate, productive businesses. Cash has a job (emergency fund, near-term spending), but it’s a terrible long-term store of value.
Try the compound interest calculator → to see what the same $10,000 does in a real asset over the same window.