Which measure helps protect savings from rising prices?

• A. Invest in low-yield cash
• B. Spend more now
• C. Earn a higher rate than inflation
• D. Hold cash at home

Answer: (C)

Rising prices erode the buying power of money saved, so protecting savings means earning a return that beats inflation. When your money earns a rate higher than inflation, its real value grows or stays steady instead of shrinking.

For example, if inflation runs at 3% and your savings grow by 1%, your purchasing power falls each year by about 2%. If your money earns 5% while inflation is 3%, your purchasing power increases by about 2% in real terms. The measure that achieves this real-growth is earning a higher rate than inflation.

Investing only in low-yield cash often yields returns below inflation, which erodes value. Spending more now reduces future savings. Holding cash at home earns nothing and can lose buying power to inflation and risk loss or theft.