Primarily because of inflation. Inflation means that the general price level of goods and services increases over time. When prices rise, the same amount of money generally buys fewer things. For example, if something costs ₦10,000 today and inflation causes its price to rise substantially over several years, ₦10,000 in the future may not buy the same quantity. This is why simply holding cash for very long periods can reduce purchasing power.

Very important. Assets can potentially generate income, appreciate in value, or both. Examples include shares in businesses, bonds, investment funds, productive property and ownership interests in businesses. The distinction is important because consuming income and owning productive assets lead to very different long-term financial outcomes.

There is no universal percentage that works for everyone. A common starting point is to aim for 10% or more, but your actual target should depend on your income, expenses, debt, emergency savings and financial goals. If 10% is impossible today, start with what you can afford and gradually increase it. The important thing is to develop the habit of consistently spending less than you earn.

Compounding occurs when your investment earnings generate additional earnings. For example, if you invest ₦1 million and earn returns, future returns can be earned not only on the original ₦1 million but also on previous earnings. This is why time is one of the most powerful ingredients in wealth creation.

Inflation is a sustained increase in the general level of prices. If your money earns 3% but prices are rising by 10%, your purchasing power is falling even though your account balance increased. This is why investors often consider real returns, returns after taking inflation into account.