I get that the value of money depreciates over time hence why they tell you that the best time to invest is now. But i don’t get how exactly investing now helps you in the future if the cost of living increases with time too anyway. So like let’s say you invested $1000 today and then in the future that’s equivalent to $4250, but then the price of things have also increased so how much richer are you really if you have to spend a lot more in the future anyway?
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The theory behind it is that your investments will increase in value faster than the rate of inflation.
Here is an overly simplified example.
The US government claims that “normal” inflation is 3% a year. If you make an investment that returns 4% a year, you’re coming out ahead 1%. (FWIW – the 3-year rate of return on my 401K is ~11%).
This is a simple example because there are things like taxes that you have to pay on your investments. The taxes vary based on a number of factors. There are some investments that grow tax free.
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