Dear Investor,
Most financial damage doesn’t happen all at once. It happens quietly, one small increase at a time.
That’s what makes inflation a persistent frustration. It’s something we’ve heard parents and grandparents complain about at family gatherings forever. Now, it’s a regular topic among friends and coworkers. Everything seems more expensive than it was a few years ago, and definitely more than it was a decade ago. Look far enough back, and the trend keeps going.
As much as people enjoy complaining about prices, especially now that social media gives everyone a megaphone, there’s real substance behind the frustration.
One of the clearest examples of modern inflation shows up in a place most of us barely think about: Subscriptions.
As much as my generation gets ridiculed for $9 lattes, the real silent creep of inflation is the growing list of monthly charges. Netflix, Amazon, Spotify (According to my year-end Spotify Wrapped, my listening habits resemble those of a 49-year-old, which I’m still trying to understand how that’s meant to be impressive.), Disney+ and more. The list seems endless.
Learn more
A Dollar’s Worth: Inflation Is Real, from the Federal Reserve Bank of St. Louis
Inflation: Prices on the Rise, International Monetary Fund
Talking Money: Inflation, by Adam Baley
What is up with inflation? by Joel Dresang
What Is Inflation and How Does Inflation Affect Investing? Investopedia
Each year, we receive a familiar email explaining that, in order to continue delivering value and improving the product, the monthly price is increasing from $7.99 to $9.99. Most of us barely blink. Meanwhile, when eggs jump from $4.99 to $6.99, it feels dramatic, even though it’s just a short-term spike. That reaction highlights the point.
Inflation usually isn’t about sudden spikes. Those grab headlines. The real issue is the slow, quiet creep. Those $1 or $2 increases don’t feel meaningful in the moment. We read the email, shrug, and two minutes later we’re back on the couch streaming the newest season of whatever we’re watching.
Over time, though, those small increases add up. Your money doesn’t disappear. It just loses strength. Things that once felt affordable slowly press harder on your budget.
For many people early in their careers, this can feel especially frustrating. You can be doing everything right — working, budgeting, and saving — and still feel like you’re treading water.
Now layer that on top of money sitting idle in low- or zero-interest accounts, and standing still starts to look like falling behind.
Subscriptions are just one example. As a young professional, inflation shows up in rent, food, insurance, phone plans, internet and streaming. No single expense does the damage on its own. It’s the combined effect. The sum of the parts quietly weakens the purchasing power of your dollar.
Assume inflation averages around 3% per year. That doesn’t sound dramatic. But over time, it compounds.
At that pace, $10,000 held in cash today could have the purchasing power of roughly $7,400 in 10 years. Over 20 years, that same $10,000 may feel closer to $5,500 in today’s dollars. Nothing happened to the money. It didn’t disappear. It simply buys less than it once did.
Now, consider the contrast.
Historically, diversified investments have, over long periods, earned returns above the rate of inflation. Using a hypothetical long-term return of around 7% as an example, that same $10,000 would not lose purchasing power over time. Instead, it could grow meaningfully over decades. Not because of a shortcut or a lucky bet, but because it had the opportunity to outpace inflation.
This isn’t about getting rich quickly. It’s about understanding the forces working quietly in the background and recognizing why long-term investing exists in the first place.
That’s inflation at work.
This doesn’t mean every dollar needs to be invested immediately. It does mean understanding what each dollar is doing. Money sitting in your checking account to cover monthly bills has a purpose. A growing pile of unused cash without a clear role is different. Awareness matters more than urgency.
Ask yourself one simple question: Is your money positioned to keep pace with inflation, or is it quietly falling behind?
Inflation has always existed and always will. It isn’t something to fear. But it is something to understand. Left unattended, it slowly erodes purchasing power. With a plan, it becomes manageable.
Standing still isn’t neutral. Awareness is the first step. Action follows naturally.
Until next time,
Kendall Bauer is vice president and investment advisor at Landaas & Company, LLC.