New Investor's Guide to Inflation and the Inflation Rate
If your investments earn 7% after taxes but the rate of inflation is 4%, your gain in "real" net worth is only 3%. That is why it is so important for you, as an investor, to understand inflation, how the rate of inflation influences the value of your portfolio, and what you can do to protect yourself against a high inflation rate. This guide...
What is Inflation?
Inflation is a rise in consumer prices, increasing the cost of living. Some inflation is caused because a country has printed too much money or experienced tremendous financial disaster, causing its currency to plummet. Other sources of inflation can be higher input or transportation costs such as gas, which makes it more expensive to ship...
What Causes a High Rate of Inflation?
There are two major causes of a high inflation rate, which increases prices and can wreck havoc on the average investor's pocketbook and portfolio. Both are fairly easy to understand and in this article, I explain the twin sources that can lead to high inflation and economic misery.
The Rate of Inflation Matters to Your Portfolio
The rate of inflation matters to your portfolio. If you don't learn to adjust your gains by the rate of inflation each year, you may think you are making money but really be losing money! Sound crazy? It's true. Take a moment to discover how this works so you can help protect your family's finances.
3 Ways to Protect Your Portfolio from High Inflation Rates
A high inflation rate can wreck havoc on your investment portfolio. There are three strategies you can try for coping with high inflation.
What Are the Effects of Inflation?
If you have ever wondered, "What are the effects of inflation?" I wrote this article for you. It discusses the effects of inflation including increased price levels, wages that lag in real purchasing power, and a net transfer from savers and investors to debtors.
Profiting from Inflation
Inflation, a term used to describe the erosion of value in purchasing power for a nation’s currency, is one of the greatest threats and dangers to your wealth and standard of living. As an investor, there are several ways you can try to lower the damage, including buying companies that earn high returns on capital and products that people need...
What Is an Inflation Index?
An inflation index is a tool used to measure the rate of inflation in an economy. There are several different ways to measure inflation, leading to more than one inflation index with different economists and investors preferring one method to another, sometimes strongly. This brief overview should help you understand how an inflation index...
Why We Aren't Seeing Inflation Yet
Why aren't we seeing inflation or hyper inflation with the trillions of dollars the United States government is printing? The answer has to do with the M1, M2, and M3 money multiplier. By understanding what is happening with these money multipliers, you can begin to understand why inflation hasn't yet picked up for the average American.
How to Calculate the Implied Inflation Rate
There is a way to calculate the inflation rate that investors think is coming in the future. It involves taking the yield of two different types of bonds (Treasury bonds from the United States Government, and TIPS, or Treasury Inflation Protected Securities, also from the United States Government) and subtracting them from each other. It isn't that difficult and if you are worried about the rate of inflation hurting your investments, you will want to learn this quick trick that can help you determine whether the market expects prices to increase.
To Guard Against Inflation, Focus on Purchasing Power Not Dollars
If you are worried about the inflation rate, protect your investments by thinking in terms of purchasing power, not dollars or euros, yen or pesos. It's all about how much stuff you can buy or give away to charity. That is the best place to begin.