Saving in the bank: security or silent loss?

josevas217 (80)in PussFi 🐈 • yesterday

Hello friends of the PussFi community, today I want to talk to you about something that for a long time many people have seen as the "correct" and safe way to manage money, which is simply leaving it in the bank, specifically in traditional savings accounts. And look, I'm not saying that banks aren't useful, because they obviously are for moving money, paying for things, receiving payments, and so on. The problem is when we believe that having the money sitting there means we're actually protecting it, because in many cases the exact opposite happens.

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This is something I've been noticing for some time now, because the interest rates offered by many banks are absurdly low. For example, at Bancolombia, which is Colombia's largest bank and probably the most widely used, many savings accounts generate a mere 0.05% annually, and some reach a maximum of 1.5% annualized, depending on certain conditions. So you start to wonder… does that really protect your money? Well, the reality is, no.

And this is where an important point that many people overlook comes in: inflation. According to data from DANE (Colombia's National Administrative Department of Statistics), this year's inflation rate is around 5.68%, meaning that money is constantly losing purchasing power. So, even if you keep seeing the same number in your bank account, or even a few extra pesos in "returns," you're actually losing purchasing power.

It's like having a bucket with a small hole in the bottom. Yes, a tiny bit of money might trickle in thanks to the minimal interest the bank pays, but the amount lost to inflation is far greater. And people often don't understand this because the money keeps appearing untouched on their phone screens, but when you go to the supermarket, pay bills, buy medicine, or simply eat out, you notice that everything costs more and more.

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Undoubtedly, having money sitting idle in a savings account for years ends up being a silent loss. This becomes even more evident when we see extreme cases like Venezuela, where inflation reached completely uncontrolled levels. Countless people worked their entire lives, saved money in the bank thinking it was the safest option, and ended up watching those savings practically evaporate over time.

Of course, Colombia isn't in that situation, at least not currently, but the economic logic remains exactly the same. If your money grows at 0.05% and inflation reaches 5%, 6%, or even more, you're simply losing money every year, even if the bank tries to make you believe you're "earning interest."

That's why more and more people are looking for different investment vehicles. Some use Certificates of Deposit (CDs) when the rates are attractive, others prefer real estate, stocks, ETFs, gold, or even cryptocurrencies. And I know that some people automatically feel a sense of rejection when cryptocurrencies are mentioned, because there's clearly a lot of risk and too many scams out there—that's also true. But it is also true that there are quite solid protocols that offer annualized returns far superior to those of a traditional bank, and that at least help to combat the destructive effect of inflation.

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Obviously, everyone should do their own research and decide where they feel safe investing their money. It's not about recklessly throwing capital into any project that promises huge returns, because that's where many people end up getting scammed. But I do believe that relying solely on a traditional savings account these days is practically accepting that your money will constantly lose value.

Things are changing, and I sincerely believe that more and more people are starting to understand that saving isn't just about putting money aside, but about finding smart ways to protect it and make it grow. Because in the end, working hard for years only to have inflation eat away at the fruits of that labor... well, it doesn't make much sense. Goodbye, take care.