Your Money Is Shrinking (And What You Can Do About It)
Here's something that doesn't get talked about enough: the cash sitting in your bank account is quietly losing value. Not because anyone's stealing it — but because of something called inflation.
Let's break this down in plain English.
What Is Inflation, Really?
Inflation is just a fancy word for prices going up over time. The coffee that cost $3 five years ago now costs $5. The rent that was $1,500 is now $2,000. Same stuff, more dollars.
Why does this happen? A big part of it is that there are simply more dollars in circulation than there used to be. The government creates new money — to fund programs, respond to crises, keep the economy moving. When more dollars chase the same amount of goods, each dollar buys a little less.
This isn't a conspiracy. It's just how modern economies work. But it has real consequences for your savings.
The Problem With "Saving"
If inflation runs around 3% a year (sometimes more, sometimes less), and your savings account pays you 0.5% interest, you're actually losing purchasing power every single year. Your balance might look the same, but what it can buy is shrinking.
Think of it like this: imagine you're on a yoga mat that's slowly sliding backward. You're not moving — but you're not staying in place either. You have to walk forward just to stay where you are.
That's what inflation does to money that's just sitting there.
So What Do People Do About It?
This is where investing comes in. The goal isn't to "get rich quick" — it's to grow your money at least as fast as inflation erodes it. Ideally faster, so you're actually building wealth over time.
There's no single "right" answer, but here are some of the common approaches people take:
Stocks
When you buy stock, you own a tiny piece of a company. Over the long haul, the stock market has historically outpaced inflation — not every year, but over decades. This is why so many retirement accounts are invested in stocks. The tradeoff? Volatility. Prices go up and down, sometimes dramatically. You need time and patience.
Historical real return: About 7% per year after inflation, according to data from NYU Stern professor Aswath Damodaran and a major Federal Reserve study spanning 1870-2015.¹ ² That means your purchasing power roughly doubles every decade — if you stay invested.
Bonds
Bonds are like IOUs. You lend money to a company or the government, and they pay you back with interest. They're generally more stable than stocks but offer lower returns. Some bonds (like TIPS) are specifically designed to keep pace with inflation.
Historical real return: About 1-3% per year after inflation, per the same Federal Reserve research.² Real safe returns have been quite volatile historically — negative during wars and high-inflation periods, higher during stable times. Bonds are less about growth and more about ballast.
Real Estate (Your Home)
Let's be clear about something: your primary residence is not really an investment in the traditional sense. Yes, it can build equity over time. But you can't spend that equity without selling or borrowing against it — and you always need somewhere to live.
Historical real return: Home prices alone — without rental income — have historically just about kept pace with inflation. The NYU Stern data shows U.S. residential real estate returning around 4% nominally since 1928, which after inflation is closer to 1%.¹ Your home is shelter first, a store of value second, and an "investment" third.
Real Estate (Rental Property)
Rental real estate is a different animal. Here, you're not just betting on price appreciation — you're generating income. Rents tend to rise with inflation, and over time, that income stream is where most of the return actually comes from.
Historical real return: According to the Federal Reserve Bank of San Francisco study "The Rate of Return on Everything," total returns on residential real estate — including rental income — have averaged about 7% per year after inflation across 16 countries over 145 years.² That's comparable to stocks, with less volatility. The catch? This requires being a landlord (or paying someone to be), dealing with tenants, maintenance, vacancies, and tying up significant capital in an illiquid asset.
Diversification
Most financial advisors will tell you not to put all your eggs in one basket. A mix of different asset types — stocks, bonds, maybe real estate — helps smooth out the bumps. When one thing zigs, another might zag.
For comparison — cash: About 0% real return over the last 50 years. Sometimes slightly positive, sometimes negative. Cash feels safe, but it's essentially running in place. Over decades, that's a losing strategy.
"What About Bitcoin?"
I get this question a lot. Some people see Bitcoin as the ultimate inflation hedge because its supply is capped — only 21 million will ever exist.³ No central bank can print more of it.
The theory makes sense. In practice, Bitcoin has been wildly volatile — it's dropped 50-80% multiple times.⁴ It behaves more like a high-risk investment than a stable store of value. That doesn't mean it's worthless; it means it's complicated.
It's also largely unregulated, which creates its own risks. We've seen major crypto platforms collapse and billions of dollars vanish. Because of this regulatory uncertainty, it's not something I'm able to advise on directly. But I think it's worth understanding the arguments on both sides.
The Yoga of Money
Here's where my two worlds connect.
In yoga, we talk about impermanence — nothing stays the same. Your body changes. Your breath changes. Clinging to how things were creates suffering.
Money works the same way. The dollar in your pocket today is not the same as the dollar from ten years ago. Its value shifts. Pretending otherwise — just letting cash sit there and hoping for the best — is a form of financial avidya (ignorance).
Investing isn't about greed or obsession with wealth. It's about seeing clearly. Recognizing that the ground is always shifting, and making thoughtful choices to stay balanced.
Where to Start
If this is new territory for you, start simple. Ask yourself: where is my money right now, and is it actually working for me?
You don't need to become a day trader or obsess over charts. You just need to be honest about what inflation means for your future — and take small, thoughtful steps to address it.
And if you want to talk through what that might look like for your situation? That's exactly the kind of conversation I'm here for.
Stay grounded. Stay curious. And take care of future you.
Sources
¹ Damodaran, Aswath. "Historical Returns on Stocks, Bonds and Bills: 1928-2024." NYU Stern School of Business. Updated January 2025. Available at: pages.stern.nyu.edu/~adamodar
² Jordà, Òscar, Katharina Knoll, Dmitry Kuvshinov, Moritz Schularick, and Alan M. Taylor. "The Rate of Return on Everything, 1870-2015." Federal Reserve Bank of San Francisco Working Paper 2017-25. Also published in The Quarterly Journal of Economics (2019). Available at: frbsf.org
³ Nakamoto, Satoshi. "Bitcoin: A Peer-to-Peer Electronic Cash System." October 31, 2008. The 21 million cap is embedded in Bitcoin's source code through the halving mechanism (block rewards cut in half every 210,000 blocks, starting at 50 BTC). Available at: bitcoin.org/bitcoin.pdf
⁴ iShares by BlackRock, "Bitcoin Volatility Guide: Trends & Insights for Investors." States: "Since 2014, bitcoin has experienced four drawdowns in excess of 50%. While one of these was followed by a quick, six-month recovery, the three largest drawdowns averaged an approximately 80% decline." Available at: ishares.com/us/insights/bitcoin-volatility-trends
Note: Past performance does not guarantee future results. Historical averages can mask significant year-to-year volatility.
Any opinions are those of Berkshire Wealth Group and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Prior to making an investment decision, please consult with your financial advisor about your individual situation.
Holding stocks for the long-term does not insure a profitable outcome.
Bond prices and yields are subject to change based upon market conditions and availability. If bonds are sold prior to maturity, you may receive more or less than your initial investment. Holding bonds to term allows redemption at par value. There is an inverse relationship between interest rate movements and fixed income prices. Generally, when interest rates rise, fixed income prices fall and when interest rates fall, fixed income prices rise.
Treasury securities are direct obligations of the United States Government. Bond prices and yields are subject to change based upon market conditions and availability. If bonds are sold prior to maturity, you may receive more or less than your initial investment. U.S. government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government.
Prior to making an investment decision, please consult with your financial advisor about your individual situation. The prominent underlying risk of using crypto currency as a medium of exchange is that it is not authorized or regulated by any central bank. Cryptocurrency issuers are not subject to the protections or insurance provided by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation, not registered with the SEC, and the marketplace is currently unregulated. Cryptocurrencies are a very speculative investment and involves a high degree of risk. Investors must have the financial ability, sophistication/experience and willingness to bear the risks of an investment, and a potential total loss of their investment.
