- Inflation is a quiet tax on savings. Money in an account and under the mattress loses purchasing power every year, even if the sum is the same nominally.
- A deposit often loses to inflation: a rate of 4–5 percent with higher inflation does not protect but only slows the loss. The real return can be negative.
- Historically, assets with real value protect against inflation best: property, stocks, gold. Their price and income rise with prices rather than lagging them.
- Overseas rental property protects against two enemies at once: inflation (the rental flow indexes) and a national currency's depreciation (income in hard currency).
Inflation is the quietest of savings' enemies. It does not take money all at once, it slowly eats its purchasing power, year after year. The sum in the account does not change, yet it buys less and less. We break down why money under the mattress melts, which assets historically hold value and why overseas rental property protects against two troubles at once.
A quiet tax on savings
If inflation is 7 percent a year, then in ten years the same sum buys almost half as much. Money under the mattress and in an account without interest loses real value imperceptibly. This is the main danger: the loss is not visible in the moment, it accumulates.
A deposit softens the blow but often does not protect fully. If the rate is below inflation, the real return is negative: you lose more slowly but still lose. A currency deposit at 2–5.5 percent amid rising prices is a slowing of the loss, not protection.
Which assets hold value
| Asset | Inflation protection | Why |
|---|---|---|
| Money in an account | none | nominal does not rise, purchasing power falls |
| Deposit | partial | rate often below inflation |
| Bonds | partial | a fixed coupon loses when inflation rises |
| Stocks | good | company revenue and profit rise with prices |
| Gold | good | a traditional store of value |
| Property | good | both the property's price and the rent rise |
The logic is simple: assets with real value protect against inflation, their price and income rising with prices. Property is strong because it protects twice: the property's value rises and the rental flow rises.
Money is a measure of value, not a store of value. Keeping capital in money is paying inflation a tax every year.
Two enemies at once: inflation and currency
Savings often have two enemies at the same time: inflation and a national currency's depreciation. Protecting against one and forgetting the second is dangerous. Overseas rental property closes both: the rental flow indexes with prices and arrives in hard currency, not in a national one. How a villa's currency income and its risks work is covered in currency risk, the dollar, the ruble and a Bali villa, and how to spread savings across currencies in currency diversification of savings.
Bottom line: inflation is a quiet tax paid by everyone who keeps capital in money. A deposit softens the blow but often loses. Assets with real value protect against inflation: property, stocks, gold. Overseas rental property is strong because it closes two enemies at once, inflation and currency risk, giving an indexed flow in hard currency. If you would like to understand what such a flow looks like for a specific property, write to us.
This material is for information only and is not individual investment or financial advice. We are not financial advisers. Historical asset properties are given as well-known tenets and are not a guarantee of future returns.
Sources: AKTIVO, 2026 (currency deposit and bond rates), DOMA project canon, the DUVI index (issue 1, July 2026).
FAQ
Why is inflation dangerous for savings?
Because it reduces the purchasing power of money. If inflation is 7 percent a year, then in ten years the same sum buys almost half as much. Money in an account and under the mattress melts imperceptibly, even if the nominal does not change. This is not individual advice, build a protection plan with your own adviser.
Does a deposit protect against inflation?
Partly and not always. If the deposit rate is below inflation, the real return is negative: you lose purchasing power more slowly but still lose. A deposit is protection of the sum and liquidity, not protection against inflation in the full sense.
Which assets protect best against inflation?
Historically, assets with real value: property, stocks, gold. Their price and cash flow rise with prices. Property also gives rental income, which indexes too. These are well-known tenets, not a guarantee of a specific return.
How does property protect against inflation?
In two ways: the property's value rises and the rent rises. When prices in the economy go up, rent and property prices usually follow. So the real value of capital in property is preserved better than on a deposit.
Why does overseas property protect doubly?
Because it closes two enemies of savings at once: inflation and currency risk. The rental flow indexes and arrives in hard currency, not in a national one that can depreciate. How a villa's currency income works is covered in the article on currency risk.
What to do right now to protect capital?
Three steps: do not keep all capital in money and in one currency, spread into assets with real value, add a source of income in hard currency. The specific plan depends on your situation, build it with your own adviser.