Purchasing Power
Purchasing power is the amount of goods and services your money can actually buy. Inflation steadily erodes purchasing power, which is why $1,000 today buys far more than $1,000 will in 20 years. Investing aims to grow money faster than purchasing power declines.
Example
At 3% annual inflation, $50,000 today has the purchasing power of only about $27,700 in 20 years.