Combating inflation

Hi All

Does anyone actively combat inflation in their investments by increasing their contributions each year to match the eroding inflation rate?

Thanks,
Colin

 

Hi legionx

Inflation is when the purchasing power of a currency diminishes. If you had 3% inflation per annum, $103 would buy at the end of the year what $100 would buy at the start. Soley adding money to an investment does not combat inflation. Your assets' combined growth and dividends have to be higher than inflation.




Johny.

 

Oh ok, so if the projected return of a managed fund is hypothetically 10% over 20 years the "reality" is it is 10% - 3% = 7% of 20 years, and then even less again because of capital gains taxes.

Sorry this should probably be moved to the uber beginners forum

 

Inflation is when the purchasing power of a currency diminishes. If you had 3% inflation per annum, $103 would buy at the end of the year what $100 would buy at the start. Soley adding money to an investment does not combat inflation. Your assets' combined growth and dividends have to be higher than inflation.Does anyone actively combat inflation in their investments by increasing their contributions each year to match the eroding inflation rate?

 

Inflation is when the purchasing power of a currency diminishes. If you had 3% inflation per annum, $103 would buy at the end of the year what $100 would buy at the start. Soley adding money to an investment does not combat inflation. Your assets' combined growth and dividends have to be higher than inflation.Does anyone actively combat inflation in their investments by increasing their contributions each year to match the eroding inflation rate?



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