What is inflation?
Inflation is a general increase in the price level. When prices rise, the same amount of money buys fewer goods and services than before.
Therefore, in long-term savings it is not enough to ask how much money is in the fund. You have to ask what is the purchasing power of money and what is the return after the effect of inflation.
Nominal vs. real
Nominal return is the return before deducting inflation. Real return tries to express the increase in purchasing power after taking into account the increase in prices.
For example, if savings rose but prices rose more, the saver may have gained in numbers but lost actual purchasing power.
How does this relate to an investment track?
In the short term, maintaining stability can be more important than achieving a high return. In the long run, savings that fail to keep up with inflation can erode.
Therefore, adjusting an investment track should take into account not only volatility, but also the need to maintain the value of money over the years.