Why the advertised interest rate might be lying to you
In short: Understanding the difference between nominal and real interest rates is essential for grasping your true purchasing power. This video explains how inflation can erode the actual growth of your savings.
The nominal interest rate is the figure typically seen in advertisements, yet it fails to account for inflation. To understand how much your money is actually growing, you must look at the real interest rate, which adjusts for how inflation impacts your buying power.
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Sources
- Summary by Intellect · source: Real vs. nominal interest rate | Banking | Financial Literacy | Khan Academy
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