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Solo2020, Ultimately, a liquid savings account is a hedge against inflation. It is better than putting the money in your mattress or in a checking account, but not by much. You are correct that you would lose money vs. inflation. The point is that you would not lose as much money.
Most sound financial advisors suggest that you keep a small, but significant amount in savings. Say, an amount equal to two months salary, to allow for emergencies that you need a quick amount of cash on hand. Beyond this amount, I use my savings account as a temporary holding place for money on the way to my brokerage for investing. I figure at least it is earning some interest before it grows to a large enough amount to make investing it worthwhile.
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You do not really understand something unless you can explain it to your grandmother.
- Albert Einstein
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