Why cash loses purchasing power, what real return means, and when a high-yield savings account still makes sense.
Inflation measures how fast prices rise. If inflation is 4% and your savings earn 2%, purchasing power shrinks even when the account balance grows.
Nominal vs real
Real return is roughly nominal return minus inflation. Long-term goals should be tracked in what you can buy, not only in account balance.
Where to hold cash
High-yield savings can reduce the gap versus inflation. It will not beat a diversified portfolio over decades, but it fits emergency money and short horizons.