The Veil of Real Return

When the bank offers thee 4% interest and inflation runs at 6%, thou art LOSING 2% per year while feeling like thou art gaining. This is the veil. The wealthy see through it; the poor live behind it.

Real return = nominal return minus inflation. It is the only number that matters. A 'high yield' savings account in a high-inflation regime is a slow bleed dressed in green.

The historical real return of broad equities is approximately 7%. Of bonds, 2%. Of cash, slightly negative. This is why ownership of businesses (equities) outperforms lending to them (bonds) over long horizons.

Always denominate thy gains in real terms. Always.