The longer you deposit money with a bank, the lower in money value

Many people may think that the most stable way to deposit money is to deposit with banks, right? Not only safe but also gets the deposit interest each year. However, if we take a look at the current economic situation which has the increasing inflation rate that is right now far more than the interest from depositing. Thus, depositing money only with the banks may not be the best idea.

Why does the longer we deposit money with a bank, the lower in money value?

Many people may be familiar with the word ‘Inflation’ which is the continuing rise in prices of goods and services due to higher production costs and increased consumer demand, resulting in lower spending power on goods and services. The higher the inflation rate is, the lower the money value. 

To have a clear picture, imagine about 5-10 years ago when a bowl of noodle was 30-35 baht but right now the starting price is 50 baht per bowl of noodle. The value of the money is the same but the price of goods and services are higher.  

This can be seen from Thailand’s average headline inflation for the first seven months of this year, rising by 2.19 % in January-July 2023. In contrast, according to the Bank of Thailand data in August 2023, the maximum 12-month fixed deposit interest rate was only 1.90% and the commercial bank’s policy rate was 1.7%. It can be seen that the inflation rate is higher than the deposit interest rate which is set by the central bank.

Therefore, to not have our money lower in value in the future, we must find deposits that offer higher interest rates and yields than inflation, otherwise, the money we save will not be enough for retirement age.

How to invest to overcome inflation

  • Mutual funds

A mutual fund is an investment that can fight inflation. It is suitable for beginners who have little knowledge or do not have time to manage their portfolios because there are asset management companies that will take care of and adjust the port. This is an interesting choice.

  • Invest in private debentures

Most of them are privately owned companies that may receive a return of around 3-6% per annum. It is recommended to invest in debentures with an investment grade rating such as A – upward.

  • Invest in stocks

Stocks are another alternative to overcome inflation because their annual yield is 8-10% per annum, with additional dividends and price spreads. However, stock investment is at a high risk and should be studied carefully.


  • Invest in gold

Gold is a valuable asset that does not fluctuate with inflation because gold will increase in value in the long run. Currently, we can invest in various forms of gold including gold bars, gold ornaments, and gold futures via websites or applications, which yield an annual return of 8-10%.

  • Invest in digital assets

For example, cryptocurrencies can yield high returns, but digital investment is highly vulnerable to losses and risks because the price of coins is sensitive to domestic and international news. Therefore, study carefully before making an investment decision.

These are the alternatives to creating wealth for us rather than depositing money in banks. Before every investment, you should understand the risks and types of returns you want before making an investment decision.

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