There are people who are believers of Saving and Fixed deposit.
Here's the Math for them.Assuming I strike lottery $1M dollar on 1st Year. The next year I start to lose $29,100 due to loss of purchasing power. Many people cannot even save that amount of money to compensate for the yearly loss.
...Year | Principal | Fixed Deposit | Inflation | Effective | Purchasing $ |
1 | $1,000,000 | 1.00% | 4.00% | -3.00% | $970,000 |
2 | $1,000,000 | 1.00% | 4.00% | -3.00% | $940,900 |
19 | $1,000,000 | 1.00% | 4.00% | -3.00% | $560,613 |
20 | $1,000,000 | 1.00% | 4.00% | -3.00% | $543,794 |
Continue my way till Year 19th. Original $1M left with $560,613. On the Year 20th, I will lose another $16,819 that year...