Purchasing power connects the nominal amount with what can actually be obtained for it. As prices rise, the same sum buys less, meaning its purchasing power decreases, even if the account balance itself remains unchanged.
This explains the difference between nominal and real returns. A deposit earning 20% annually with 18% price growth delivers approximately 2% real growth: the sum increased significantly, but purchasing power increased only slightly. If the rate is below inflation, real returns are negative, and savings lose value despite a formally growing balance.
This effect compounds over long-term savings. A sum set aside for a goal ten or twenty years ahead should be evaluated in future prices, not today's—otherwise the plan will prove insufficient regardless of savings discipline.
Practical conclusion: when choosing an investment vehicle, the benchmark is not the rate itself, but its ratio to price growth. This principle applies to any long-term savings, including retirement funds.