Inflation a necessary evil

You may long for the days of 1c lollies, houses that cost thousands not hundreds of thousands and cheap fuel. However times change and inflation is just one of those necessary evils. Most of us notice inflation when we look at the cost of living; however it affects your savings as well.

Let’s use a deposit of $10,000 invested at 6%pa compounding. If you left this investment for 25 years then you would have approximately $43,000. Now consider that the current rate of inflation is 4.5% interest on savings then your investment starts to lose its shine. You should note that if you had not invested that money at all but left it under the bed then you would be significantly worse off, so how do you make money in this crazy world?

Ultimately inflation is unavoidable, so your best chance is to find the highest return on an investment that has a risk level with which you are comfortable. Nothing is life is free and the only way to generate wealth is through hard work, planning and good investments.

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