From time to time, you may see the news talking about inflation and its impact on our finances. Inflation remains a relevant topic because it can affect our spending power.
Simply put, inflation measures how quickly the price of the things we buy increases over time. For example, candy bars from a vending machine typically cost 50¢ twenty years ago. However, these days, we pay closer to 75¢ (or more!) for a candy bar. This concept applies to most things in life — from the cost of milk at the grocery store, to the interest rates you may pay on your credit cards. As you can see, inflation decreases your buying power over time when prices naturally go up.
The average rate of inflation has been around 3%. So, when it comes to your long-term investment goals, make sure you consider investments that have a chance of keeping up with, or even beating, inflation over time. That way, when you reach your golden years, you can look forward to being able to give your grandchildren a few more candy bars.
The information on this page is provided for educational purposes only and is not tax, legal, financial planning or investment advice. Neither the information nor any opinion expressed in this section constitutes an offer to buy or sell any securities or advisory products. The information provided is general and is not information reasonably sufficient upon which to base an investment decision and should not be considered a recommendation to purchase or sell any particular security. You should not regard this information as a substitute for the exercise of your own judgment. Investing involves risk.