So we will use the 3% figure as we discuss the effects of inflation. The business will then pass the extra costs on to their customers – inflation. Also you may want to golf or travel more than you do now. Some investments such as real estate and precious metals (gold, silver, etc. Less than half! A detailed analysis of the cause of inflation is beyond the scope of this short article, but we can mention some things that tend to cause inflation. After 30 years of 3% inflation, one million dollars will buy about $400,000 worth of goods and services. But when planning for the future you can include it in your calculations. So if you are going to assume a 3% inflation rate and the assumed rate of return is 11%, do the projection with only a 8% rate of return or interest. Inflation: What Is It And Why Does It Happen? This may make you want to truly “diversify” your portfolio into more types of assets, not just more types of stock. Inflation can also be caused by scarcity. ) actually benefit from inflation. Increases in government taxes and fees can lead to inflation (especially when businesses are taxed). If there are [...] This will give you a more accurate picture of the value (not the amount) of the investment at its maturity.
Maryland Real Estate