Last year’s Inflation ~ 1.5% and US T-Bill’s Rate of return ~ 0.11%. So, if I invest money in T-bill, does it mean that I will lose money relative to the inflation? As in, should I just keep my cash in my hands?
You shall use your money to buy some real assets of which their prices inflated at rates least as the iiflation rate. Buying t-bill makes you lose 1.39% (1.5 - 0,11%) and keep cah on your hand will make you lose 1.5% (even more).
But, then the demand of such debts should go down, in my opinion. Why are these still used? I will be at a loss if I keep my money in such accounts. Moreover, almost all savings account in the US give savings rate of less than 1%. (http://money.cnn.com/2013/10/01/pf/savings-account-yields/ )
Does it mean that all those savings accounts are useless? Can someone please comment?