The Fairy Godmother Test

Imagine a fairy godmother gave you a million pounds when you were born....

and you kept it carefully saved…

When you were born the purchasing power of your money would have bought you a million pounds worth of stuff.

But let's say the lucky recipient of that million pounds is now thirty years old.

Unfortunately now that million pounds only buys the equivalent of what would have cost £378,673 in 1993.

Even though there is still £1,000,000 in cash the value of those cash savings decreased by £621,327

Graph from in2013dollars.com

If you saved the million till you were fifty years old it gets worse...

Now that million pounds will only buy you the equivalent of what would have cost you £59,236 in 1973.

Even though there is still £1,000,000 in cash the value of those cash savings decreased by £940,764

Graph from in2013dollars.com

That's because of inflation.

It erodes the purchasing power of your cash savings.

That's why you'd need a lot more pocket money to buy a freddo today then back in the day.

How to avoid this from happening to you…

You need to learn how to invest in assets that beat inflation. Things like property and stocks. Because cash isn’t always king.