Let’s talk about the i-word. Inflation. This is the loss of your money’s value over time. It’s like invisible termites, except these termites eat the value of your money instead of wood and you can’t see them. (scary emoji) You’ve dealt with Inflation before. Remember when your $1 used to buy so much candy years ago, but now barely gets you a bottle of water?
So what? This means that even if you kept $100 from 5 years ago and put it in a standard savings account and didn't touch it, its value would be much less today. You would need to have $112 today to equal the $100 from 5 years ago. Cash loses value over time!
What can we do to combat inflation? We can invest our money in index funds and ETFs so that our money can grow and compound at rates that exceed inflation. If stocks are too risky for you, consider investing in an inflation-hedged asset like government bonds. These wont grow as fast as stocks but they will at least match inflation, preserving the value of your investment so that you don't lose money.