My recent post about inflation got me thinking about holding cash versus investing. The image above demonstrates the extraordinary effects of inflation and investing. The black line shows the deteriorating effect of inflation on $1 and the red line shows the wealth generation of investing $1 – both over a 100 year time period. The $1 held in cash deteriorated from possessing a purchasing power of $20.52 in 1914 to just $1 in 2014. In contrast, a $1 invested in the S&P 500 in 1914 grew to $15,197.23 of purchasing power in 2014. In a nutshell what does this mean? Like a previous post I had titled Why You Need to Invest Your Money… you need to invest your money!