There is a thief hanging around your money taking a tiny bit every day. He takes so little you may not even notice on most days. Only when you look back to when you were younger do you stop to notice. Inflation is slowly but steadily robbing you blind.

Inflation has been steady in the United States at around 3 percent for a generation. Everyone has come to expect that level of inflation and to think of it as benign. There are good economic arguments for it, but we'll set those aside. The fact is, in order to have the lifestyle you enjoy today for $75,000 per year, you'll need to have more than $182,000 of income to enjoy if inflation continues at about 3 percent.

For example, a car that costs $30,000 today will likely cost almost $73,000 in 30 years. A house that costs $200,000 today will likely cost about $485,000 in 30 years. If you think it would be great to have $1 million when you retire that will be enough only to buy a modest house, two cars and to generate an income of $35,000 per year for 20 years - roughly the equivalent of $15,000 per year today.

You would obviously never be able to replace the cars. Travel and golf would be almost out of the question. Your money will go almost exclusively to food and medicine. Imagine how much worse it would be if you don't have a net worth of $1 million in 30 years when you retire.

Because inflation exceeds the rate of return you will earn on your FDIC insured deposits, you need to keep your money invested in riskier, higher return assets like stocks and bonds. Cash in the bank loses value every day, even though the account balance grows with interest. Inflation consistently grows faster than interest rates on FDIC insured deposits. By building a portfolio of stocks and bonds it is reasonable to hope that you can earn a return that will exceed the rate of inflation. The best way to invest in stocks and bonds is with mutual funds.

If you have the money and the desire to own real estate, buying a duplex with a large down payment and a low interest rate loan can be a good investment (read more about buying a duplex here on FamilyShare). The duplex will likely appreciate at near the rate of inflation over the holding period, the rents should cover the mortgage and in the end your return on your down payment could exceed returns in the stock market.

You may never see this inflationary thief at work, but you can count on him to be there. He will be working non-stop to prevent you from achieving your financial goals. To beat him, you've got to be smarter than he is. He's easy to defeat if you make the right decisions. Empower yourself by investing in assets that can be expected to yield returns higher than inflation.