Definition: This is the idea that things will cost more ten years from now than they do today. When prices are rising, we call it inflation.
TeenAnalyst Advice: Inflation is bad for investors because it eats away at their rate of return. It's also a critical reason why people should invest their money.
There's a cost to keeping your money in cash. That cost is that it won't be able to buy as much in the future as it will today. If inflation is 3.5% per year (the historical average), it means your money is losing 3.5% of value each year. So if you're earning less than 3.5% in interest, you're actually losing money.