Continued from my earlier Damn to Saver article, with the continued QE though tapered and expectation of long term low interest rates, high inflation will continue to stay with us one way or the other. Nevermind about the statistics from any governments.
This ......Compounded 2.5% inflation across 5 years,
| Years | Principal | Inflation Rate | Purchasing Power | Principal Reduction |
| 5 | $10,000 | -2.50% | $8,811 | -11.89% |
Compounded 4% inflation across 5 years,
| Years | Principal | Inflation Rate | Purchasing Power | Principal Reduction |
| 5 | $10,000 | -4.00% | $8,154 | -18.46% |
what this means are you need to deduct probably 20% profits you made from the past 5 years just to break even after fixed interest returns are taken into consideration. So don't start patting yourself on the back yet till you are earning way above it.
For those who has Stayed on the sideline Mainly, good luck to you !
Cory
25th May 2014
