Can you remember using a stamp back in 1982? At the time, the cost to post a letter was 24c. Now it’s 60c – more than double the cost, in less than 30 years! This simple comparison shows the power of inflation.
Are you holding a large portion of your investments in cash? Happy with your interest rate?
Inflation is the increase in the level of prices of goods and services in an economy over a period of time. The current Australian inflation rate is about 2.7%. This figure represents the erosion in the purchasing power of your money….so subtract this figure from your current cash interest rate to get your real return in a twelve month period.
Inflation varies constantly due to market conditions both domestically and internationally. Depending on your personal circumstances, a well diversified portfolio for your superannaution, pension and other investments is the only way to combat inflation.
As always – talk to us for further information and a discussion about diversifying your portfolio.
