Share

Inflation-proof your savings

You can’t control the rising cost of living - but you can counter its effects.You can’t control the rising cost of living - but you can counter its effects.


Inflation-proof your savings

The annual inflation rate is 0.0%1 according to the Bureau of Labor Statistics and not likely to rise significantly in the short term. But it would be a mistake to attach too much importance to that that figure - or to take it as reassurance that the cost of living will remain where it is indefinitely.

For one thing, the terms "inflation" and "cost of living" are not interchangeable. While the inflation rate serves as a broad indicator of increases in the cost of goods and services, the Cost of Living Index provides a more meaningful – and less rosy - picture for individuals.

What it shows is that even in today's low-inflation environment, consumers are facing steep increases in specific categories, such as prescription drugs, groceries, apartment rents and college tuition, among others. What's more, wage growth has slowed significantly over the past several years, making it even more difficult to keep up with rising costs.

Protecting what you've built

Whether your main focus is on inflation or the cost of living, the most noticeable effect is a gradual erosion of purchasing power.

To preserve your money's real value, you need to grow it at a rate that at least stays even with inflation and, more specifically, with the cost of living.

Many people pursue that objective through investing. But keeping a portion of your savings in depository accounts such as savings accounts and Certificates of Deposit (CDs) can provide a bulwark against unexpected emergencies and the loss of purchasing power.

In deciding what type of savings products are right for you, consider these questions:

Will my savings be insured?
While investments offer the potential for higher returns, they are not insured by the Federal Deposit Insurance Corporation. In contrast, depository accounts at most major U.S. savings institutions, including CIT Bank, carry $250,000 in FDIC insurance per account ownership category per bank.

Inflation is one of those inevitable frustrations, like snowstorms, traffic jams, and flight delays, that can't be controlled. But you can take steps now to make sure inflation doesn't weaken your purchasing power – and deflate your dreams.


Selected products ()
Product
APY**
Minimum balances
Available as IRA
Available as Custodial
APY**
Minimum balances
Available as IRA
Available as Custodial