Is cash actually losing money?

Not in nominal terms — the balance never falls. In purchasing power it loses steadily, and 3% a year compounds to 59% over thirty years. Both statements are true at once, which is exactly what makes the erosion easy to miss.

How do I compare a return against inflation?

Divide rather than subtract: (1 + return) ÷ (1 + inflation) − 1. At 5% return and 3% inflation that gives 1.94%, slightly less than the 2% subtraction suggests. The gap widens as both numbers rise.

Inflation Calculator

What will your money be worth in 10 years? Calculate value after inflation.

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Inflation Guide

What is inflation?

Inflation is the general increase in price levels in the economy, causing purchasing power to decline over time. When inflation is 3% annually, the same 100 zł in 10 years will be worth only about 74 zł in today's money. Inflation is measured by Statistics Poland (GUS) using the CPI (Consumer Price Index), which tracks price changes in a basket of representative goods and services. In Poland, target inflation is 2.5% annually, but recently it has been significantly higher.

Impact on savings

Inflation erodes the real value of savings held in cash or low-interest accounts. If your savings earn less than inflation, you're losing money in real terms. For example, with 3% inflation and 1% deposit interest, the real rate of return is -2%. That's why it's important to invest savings in instruments with returns exceeding inflation — deposits above inflation rate, inflation-indexed bonds, stocks, or real estate.

Inflation protection strategies

The best inflation protection is portfolio diversification. Term deposits offer protection only when interest rates exceed inflation. SKARBond government bonds are indexed to inflation and guarantee real returns. Real estate investments traditionally protect against inflation because property prices rise with construction costs. Dividend-paying stocks can also be good long-term protection.

Inflation and loans

Inflation can work in favor of borrowers, especially those with fixed-rate loans. As inflation and wages rise, the relative loan burden decreases — you pay the same installments but from higher income. However, higher inflation usually means higher interest rates, increasing new loan costs. With variable-rate loans (dominant in Poland), rate increases translate directly to higher installments.

Cash loses 5,880 in thirty years without the number ever changing

Inflation is invisible because it never touches the figure on your statement. Ten thousand left in cash for thirty years at 3% still reads ten thousand, and buys what 4,120 buys today. Nothing was taken; the unit shrank underneath the number.

How it works

Converts an amount into its future purchasing power at a chosen inflation rate.
Works the other way too — what a future sum must be to match today's spending power.
Makes the erosion explicit over long horizons, where it is largest and least visible.

future purchasing power = amount ÷ (1 + inflation)^years

amount needed later to match today = amount × (1 + inflation)^years

Rule of 70: years to halve purchasing power ≈ 70 ÷ inflation rate

Worked example

100 today, and 10,000 held in cash, both at 3% inflation.

100 buys 74.41 worth after 10 years
55.37 after 20 years
41.20 after 30 years — a 59% loss
to match today's 100 you would need 242.73 in thirty years

Ten thousand in cash still says ten thousand after thirty years but buys 4,120 — 5,880 of purchasing power gone with no transaction, no fee and no visible event.

Reading the result

This is the case against holding long-term savings in cash, and it is arithmetic rather than a sales pitch. Cash is the right home for an emergency fund, where certainty of the nominal amount is the whole point; it is the wrong home for money you will not need for twenty years.
The Rule of 70 works well as a shortcut: at 3% it predicts halving in 23.3 years against a true 23.4. At 7% it falls to 10.2 years, which is why sustained high inflation is so destructive to savers.
Compare investment returns after inflation, not before. A 5% return during 3% inflation is a 1.94% real gain, not 5% — and a 3% savings account during 3% inflation is standing still while appearing to grow.
Personal inflation differs from the headline rate. If your spending is weighted toward housing, energy or education, your own rate may run well above the published index, which is an average across a basket you do not actually buy.

Common questions

Is cash actually losing money?: Not in nominal terms — the balance never falls. In purchasing power it loses steadily, and 3% a year compounds to 59% over thirty years. Both statements are true at once, which is exactly what makes the erosion easy to miss.
How do I compare a return against inflation?: Divide rather than subtract: (1 + return) ÷ (1 + inflation) − 1. At 5% return and 3% inflation that gives 1.94%, slightly less than the 2% subtraction suggests. The gap widens as both numbers rise.