Every year, the value of financial assets in the Western world increases – Europeans, Americans and Asians have never had so much money on the books as they do today. However, this is not due to high interest rates, which increase capital, but to sheer austerity, which has become more entrenched due to the pandemic.
Meanwhile, inflation is nibbling away more and more at the hard-earned wealth of most savers and eroding the purchasing power of savings at a rapid pace. Those who continue to rely purely on their bank interest rates as the only investment vehicle have no chance of long-term, solid wealth accumulation and face the spectre of a drastic loss of wealth.
Inflation: wealth loss that many have never seen before
The first signs of this trend can already be seen, only recently the U.S. Bureau of Labor Statistics published a 5.4% increase in consumer prices compared to the same month of the previous year. This is the highest monthly inflation rate in 25 years, comparable only to the world financial crisis in 2008. Similar figures are also being reported from other countries, predominantly in Europe, with the main price drivers almost universally being housing, energy and travel.
Thus, those who have to commute long distances to work in their own cars and who live in urban areas with high rental rates are particularly affected. Although property prices have risen steadily in recent years, rental rates have galloped away from them. No wonder, given that there has never been so much new money being printed as during the coronavirus epidemic. Last year alone, the M2 money supply of the world’s major reserve currency – the United States Dollar – rose by over 25% to a new all-time high (see Figure 1). Yet this is not unique to the US-Dollar, since we saw similar money printing rates for other fiat currencies as well. As a result, negative implications for all savers are imminent.
The biggest problem with inflation is that it works insidiously and most people only notice it when it is too late. In the days of our parents and grandparents it was easy, as you could still achieve your dream of owning your own home with a savings book and high interest rates – today this is a relic from the past. If you save money these days, one thing is certain: it is worth less and less. In the current interest rate environment, banks can hardly pay out any interest and inflation eats up these few meagre percentages (see Figure 2).
As shown in Figure 1, real yields on overnight deposits have never been so low for such a long period of time. This combined with a significant increase in inflation could capitalize demonetization into new dimensions that perhaps only our grandparents experienced in their younger years. Correspondingly large losses are soon coming to today's savers.
Outsmart inflation and invest wisely
Slowly but surely, interest in alternative investment options such as shares or funds is on the rise. Nevertheless, there are still large sums of money lying around in daily maturing bank accounts and savings accounts, where the value is slowly melting away. One investment alternative in particular, which has become increasingly popular over the last few years, beats many of the previously mentioned ones by far and is also increasingly in demand across all age groups – saving with cryptocurrencies.
Crypto savings come in all shapes and sizes – from volatile cryptocurrencies to stablecoins that are mostly pegged to the US dollar and follow its exchange rate. The most lucrative thing, however, is that although you are effectively holding US dollars, the interest is much higher than on a savings account.
This evolution of saving and investing is gradually starting to take root among an increasing number of investors. Nevertheless, the majority of investors do not yet profit from this lucrative form of investment because they lack the technical understanding for it. It is also clear that the majority of them need support in order to avoid saving below value.
And this is where service providers like Cake DeFi come into play, untangling all the technical jargon and making cryptocurrencies usable for everyone in simple and understandable language.
By investing in cryptocurrencies, saving becomes lucrative again and thus nothing stands in the way of a real increase in hard-saved capital. Crypto-saving is a completely new and extremely profitable form of saving. Not only do you participate in the rising prices of the most renowned cryptocurrencies such as Bitcoin, Ethereum or non-volatile stablecoins, but you also receive guaranteed interest on top. And these are more than just impressive: You currently receive up to 7% on deposits with a minimum term of just one month.
And this is only the tip of the iceberg, because underneath it lies a network of innovative products making every investor's pulse race. These products go by such abstract names as staking or liquidity mining and have one thing in common: returns in the high double-digit range.
Savers who have so far stuck to interest deposits should definitely rethink their investment strategy and consider new types of investments such as crypto-savings. This is not an "either-or" decision, because even with small amounts one is very well positioned and can already generate juicy returns.
Of course, such investments always entail risks, but even the supposedly safe savings are by no means as safe as they seem. Even if the amount in the account does not decrease nominally, billions are lost in purchasing power every year.
To make the entry into crypto-saving not only easy but also lucrative, get a $30 signup bonus on your first deposit of $50 into cakedefi! Try it today and get interest rates that would have been unimaginable in the current banking system and that your grandparents wouldn't have even dared to dream about.
Stay tuned for more articles on investment tips!
