Study up. You’re living the test.
You can head straight to PF 201 if you master the course above.
Spending the $1,000 results in an instant 100% loss in value, storing it in cash brings a 53% loss in value over 25 years, saving it brings a 22% loss in value over 25 years, but investing results in a 238% gain in value over 25 years.
There are so many important bullet points to be extracted from the table above. These are lessons some people never learn and are more valuable the earlier you start:
- Spending money is not a great investing strategy, but prevents losses to inflation (this is sarcasm).
- Inflation is an absolute killer. It is the slow-churning, deadly assassin in your financial life.
- Even a 2% rate on cash in the bank leaves you with a 77% less purchasing power after 25 years when compared to investing @ 8% per year AND you still lose to inflation.
- Beating inflation (earning 8% versus 3% inflation) is the only way to increase your wealth.
Let’s repeat that last one, as it’s the answer to the only question on the PF 101 test:
- Beating inflation is the only way to increase your wealth.
- Beating inflation is the only way to increase your wealth.
- Beating inflation is the only way to increase your wealth.
And for the visual learners:
