Our grandparents have always taught us to keep savings, or at least part of it, “under the mattress” to avoid the risks of checking accounts or other money management services, but are we sure it’s really worth it? The numbers reveal a shocking truth
According to a recent study, the habit of keeping all or part of our savings in cash at home or in a safe may not be as safe or convenient as we might think, or as our fathers or fathers always told us. . Times are changing, and financial systems are too. It is not certain that ancient recipes are still effective today.
With me Very little returns Generally provided by deposit accounts or banking institutions, unless we are or have expert investors Trusted advisor To guide us, managing savings has become an increasingly pressing issue for millions of Italians.
The old solution of putting money under the mattress can be misguided. In fact, although even a minimal return is better than a zero cash return, there are other factors to consider such as:Economic inflation And your personal Willingness to take risksIf you are looking for alternative solutions like Managed savings or investment.
With money under the mattress, we could lose more than 40% within twenty years
store i monetary Using the old strategy of hiding at home he can It really costs a lot, even if it does not immediately catch the eye at first glance. Let’s take a practical example by imagining that we set a side Save 1000 euros in 1999 And let’s see what would happen and how far we would be today.
It’s 1999, the new millennium is approaching, and there are a lot of unknowns. Of terrorism related Millennium bugthe legendary disaster that many feared would destroy computers around the world with the beginning of the year “00”, to the doubts associated with the new technological revolution that was screaming its first cries to the world, there are many doubts and temptations to try Protect your savings Under the mattress is powerful for many people.
So we decided to keep our €1,000 in the salt box in the pantry. Years pass and we reach 2019. How much money will we have left? purchasing power From our initial 1000 euros? Although the face value has remained unchanged, to borrow a modern quote from Mario Draghi “One euro today, one euro tomorrow”, we can say that the thousand euros that we hid twenty years ago are still the same thousand euros. TRUE. but Prices of goods have changed. The value of those thousand euros decreased significantly.
Why is keeping money “under the mattress” a bad idea?
Staying with the previous example, the calculations show us how the real value of that thousand euros in 2019 is today Equivalent to 588 euros of purchasing power. This means that at that time, to buy the same things by spending 588 euros, we would have had 412 euros left over. But today, we were spending the whole thousand on the same expenses.
This translates to a Real loss more than 40% on the savings stored in this way. The reason is found in inflation, that is, the phenomenon that leads to an increase in commodity prices in accordance with an increase in the monetary base.
This means, in simple words, that if there are more euros in circulation in the world, prices will tend to rise, making more euros necessary for the same goods, making them proportionately less valuable than before. That’s why the experts They consider the option of keeping cash savings to be one of the worst options everAt least as long as we live in an economy that moves according to today’s laws.
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