alleryStart learning →What is the long-run danger of leaving all your money in a savings account?
AThe bank can refuse withdrawals
BCompounding stops after five years
CThe FDIC fee consumes the interest
DInterest may not keep up with inflation
Answer & Solution
Correct answer: D. Interest may not keep up with inflation
1. Savings are secure but earn a low wage.
2. Over long periods the interest earned may not keep up with inflation.
3. A saved dollar that once bought a loaf of bread may later buy only half a loaf, which is why people also invest.
_Source: "Saving and Investing: A Roadmap to Your Financial Security" (US SEC, public domain), section Investing_
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