It eats money.  The biggest reason that it is foolish to hide your money in these popular hiding places is the fact that inflation exists.  Inflation can get to your money in your piggy banks and pretty much anywhere else you can think of hiding it.

What is this monster?

Inflation is the reason why 150 dollars bought me 100 gallons of gas when I started driving in 1997 and why the same 150 dollars will only buy me 48 gallons today.  That is less than half and that is with me using websites like this to find the cheapest pump.  This monster has raised the prices of other stuff too like groceries and house prices.  For example, this is a more detailed list for one city.

How do you fight it?

To keep inflation from rendering my money totally useless, I’ve personally looked for better places to hide it in.  This is not to say that inflation can be totally avoided but by putting my money in these places instead of just holding it, I give my money a chance to grow a little bit.  In that way, even if I needed to buy 100 gallons of gas,  my initial 100 dollars could have grown to 215 dollars or even more.  Inflation still gets the upper hand in this case but at least my money is not totally getting demolished.

Look for a good hiding place

Savings (high yield) -  There are a lot of online banks and institutions that offer an OK return.  And you have the option of taking the money out if in a pinch.  But you might see the APY move up or down.  This is the one I use.

CD’s-  These certificates are given to you by the bank or institution and they give a higher fixed APY return than regular savings because they encourage you (through big penalty fees) to keep the money with them for the entire term of the certificate (ranging from 6 months to 5 years).

MMA’s-  Money market accounts are kind of in the middle of these two.  You can take out money if you had to but only six times a month or so.  They really encourage that you keep as much money in your account and not take it out by hitting you with fees if you do take your money out too often.

These people can help

Check out Bankrate.com to see who is offering the best deal.  And you need to get the best deal because some are already forecasting a sizable inflation bump may be around by March next year.

There are also rumors going around that a more vicious and money-hungry enemy is lurking just outside the shadows: HYPERinflation.  And yes, it is as scary as it sounds.  But that is a whole other topic…..

Where are you hiding your cold hard cash?  Has it been a good place to keep it in so far?

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