Review - The Theory that Savers are Losers

The first time I heard the theory that "savers are losers" was from Robert Kiyosaki, author of Rich Dad, Poor Dad. Its a funny statement to make, but when you listen to his argument it really gives you something to think about.

Essentially the theory explains that people who save money, be it in the bank or wherever are actually losing money, due to inflation. When you park your money somewhere where it is not actively invested and working for you all you can really expect is a few percent in interest. When inflation runs at the average 3% in western economies any interest you gain simply gets eaten up by the natural run of inflation.
So all the money you are saving gives you either the same purchasing power as the year before, or worse you are actually able to buy less with this money than you could last year.

To put it in money terms, say you have saved $1000. You put this in the bank at 3% interest. 3% Interest? The bank rate may be 4-5% but after tax you will generally receive around the 3% mark. After year 1 the dollar amount in your bank account is $1030. Lets say over the year inflation ran at the average 3%. That is prices for everyday goods rose on average 3% in the economy over the year. So lets reduce the $1030 by 3%. Your $1030 can now only buy you $999.10 worth of goods compared to the previous year. So in effect you have lost money by saving!

So what does this mean? Does it mean that we shouldn't save?
I think saving is a good idea and a good habit to get into. But isn't it crazy to think that all your hard work to save is actually dissolving by the day? To think that saving money alone will enable you to "get rich" or have a great retirement is a flawed way of looking this issue. You really need to increase your savings at a faster rate to escape inflation and to see some real benefit from tucking away your hard earned cash and not spending it.

So how can we increase the return we get on our savings?
We need to look further afield than simply putting money in the bank. There are so many options and other methods of receiving a higher return on your money. In future blogs I will be investigating and reviewing all kinds of options for us to achieve a higher return.

So please keep checking back to this blog for ideas on how to increase your money and avoid the "Savers are losers" theory.


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Auckland, New Zealand