66
votes
Accepted
How inflation really works?
Let’s say my salary is 1000$ since 2020.
OK. If a pizza costs $20 that means you can buy 50 pizzas.
what an inflation rate of 10% in 2022 means if in 2021 it was 5% (for
example) and 5% in 2020
At ...
- 133k
60
votes
Why would I ever put my money into a savings account that returns less than the current inflation rate?
Why? Because the two are unrelated. "Inflation rate" is calculated by measuring changes in the consumer price index (CPI). Your personal consumption may not match the CPI and the inflation you ...
- 75.7k
40
votes
Why can more jobs mean more inflation and decreased stock prices? What are other links in the chain to watch out for?
Many news outlets ... are reporting that the current US stock sell-off is due to a stronger-than-expected jobs report in January...
Had the market done well in the last few days those same people ...
- 47.1k
33
votes
What does inflation mean to me?
Inflation as defined in the general, has many impacts at a personal level.
For example, you say that the reduction in the price of oil has no impact on you. That's absolutely not true, unless you're ...
- 35.7k
33
votes
What does an x% inflation rate actually mean?
Let's say there's a product worth $10 in July and the inflation rate in August is 10%. Will it then cost $11 in August?
Yes. That's basically what inflation means. However. The "monthly" inflation ...
- 48.9k
32
votes
If stocks are products, and inflation makes the price of products go up, then why don't stocks benefit from inflation?
Stocks aren't products, they are assets.
In either case their prices DO tend to go up with inflation just like any other asset. However, I wouldn't say they benefit from this any more than owning any ...
- 52.9k
27
votes
Why would I ever put my money into a savings account that returns less than the current inflation rate?
You keep money in a savings account so that you know you can access it at any point, and that it will always be there. It is diversification of risk.
If you have the money in equities instead, you ...
- 5,087
27
votes
Accepted
What’s the difference between inflation and inflation tax?
It's mostly semantics. Per https://en.wikipedia.org/wiki/Talk%3AInflation_tax#:~:text=An%20inflation%20tax%20is%20the,that%20subtracts%20value%20from%20currency.
An inflation tax is the economic ...
- 7,605
24
votes
Accepted
Should I max or min my affordability on a new home?
Your comment about quality of living is the answer to your own question.
In general, it's best to live in as small a house as one can be comfortable.
You offer no other real details beyond $1,000/...
22
votes
Accepted
If stocks are products, and inflation makes the price of products go up, then why don't stocks benefit from inflation?
Stocks are not products, they are shares of companies. If the companies are expected to perform well, stock prices are high. If they are expected to perform bad, stock prices are low. If a company was ...
- 7,422
21
votes
What Was "A Lot of Money" In 1971?
First, from The Inflation Calculator -
What cost $24,000 in 1971 would cost $141,898.11 in 2015.
But. In 1970, mortgage rates were 8.5% vs 3.5% today. The payment on $24K (let me just do the math ...
21
votes
Accepted
How much do I need to invest monthly to accumulate a given amount?
If you save x every month, the future value (FV) is
where
n is the number of months
r is the monthly rate of return
So if Y% return is 10% nominal interest compounded monthly
r = 0.10/12
For ...
- 9,467
20
votes
Accepted
What Was "A Lot of Money" In 1971?
To answer your specific question about income, the answer is: about $20,000 (or a little less) in yearly income put you in the top 10% of income earners in the United States in 1970. This information ...
- 11.7k
17
votes
Why can more jobs mean more inflation and decreased stock prices? What are other links in the chain to watch out for?
First, I advise against attributing stock market movements to particular pieces of news. Many cable shows depend on your interest in this question, but unless the news is nuclear war, its long-term ...
- 1,801
17
votes
What’s the difference between inflation and inflation tax?
It IS going to the government. What causes inflation is when the government increase the money supply faster than the economy is growing.
Imagine a simpler monetary system with no fractional reserve ...
- 22k
16
votes
Accepted
Inflation and the current value of my dollar
Your $100 at t=0 will be worth $55.2 thirty years hence.
Something that costs $100 today will cost 100*(1.02)^30 = $181 30 years later. So your original $100 can purchase only 100/181 worth of goods ...
- 1,064
15
votes
Accepted
What is inflation?
Inflation is basically this: Over time, prices go up!
I will now address the 3 points you have listed.
Suppose over a period of 10 years, prices have doubled. Now suppose 10 years ago I earned $...
- 253
15
votes
Should I max or min my affordability on a new home?
Other things to consider:
Bigger house generally leads to higher costs besides the purchase price. Utilities will be higher, general repairs will be higher, Taxes (I assume you figured them in, but ...
- 2,778
15
votes
safe investment for maintaining purchasing power
One year is very short term in terms of investment horizons. Depending on your anticipated distribution/spending pattern, the most appropriate choice is likely either a high-yield savings account, CD, ...
- 9,506
14
votes
What does an x% inflation rate actually mean?
As pointe out by @quid, inflation figures are almost always quoted as a comparison of prices last month, and prices a year ago last month. So 10% inflation in August means that things cost 10% more ...
- 4,294
10
votes
Should I stockpile nickels?
Nine years later, we know that pursuing this strategy is a losing proposition.
Using the Base Metal Coin Melt Value Calculation at coinflation.com as you suggested, we see that $10.00 of nickels is ...
- 50.5k
10
votes
What does an x% inflation rate actually mean?
Individual product prices do not necessarily rise at inflation rates. What inflation means is that the purchasing power of one unit of currency decreases by x% in a year, which is typically measured ...
- 129k
10
votes
Accepted
Salaries updated for inflation
Inflation is a macro pressure. It is not experienced at a micro level on a 1 to 1 basis.
In a given year a pay raise less than the stated CPI rate, for some people the change will either
be a real ...
- 48.9k
10
votes
Why would I ever put my money into a savings account that returns less than the current inflation rate?
Any store of value has some risk of being outpaced by inflation, as measured by some other asset. For instance, you might invest in property, but find that the cost of a loaf of bread has gone up ...
- 960
10
votes
Is it correct to think: when the government prints money and I buy 3 houses, then when the price of house doubles, I get 1.5 houses for free?
If you have enough cash for all the downpayments and reserves and enough income to qualify for all the mortgages - yeah, sure. That's leveraging. Those who can afford it most definitely gain from high ...
- 161k
9
votes
What is the future of 401(k) in terms of stability and reliability?
The same author wrote in that article
“they have a trillion? Really?” But that’s what happens when ten
million dollars compounds at 2% over 200 years.
Really? 2% compounded over 200 years ...
9
votes
Accepted
How much value will money lose if left in a checking account?
The average inflation rate in the US over the last 17 years is 2.17% per year (source).
So he has $30,000 now. If another 3 years go by and he doesn't invest it in anything whatsoever, he would have ...
- 3,397
9
votes
Rough and ready value for cash offer on a house?
Specifically, I wonder if the CPI calculator is a good choice for what
I am doing.
What someone paid for a house 'x' years ago is irrelevant, maybe it required massive repairs at the time they ...
- 68.6k
8
votes
What does inflation mean to me?
Inflation data is a general barometer for inflation that a typical consumer would experience. Generally when calculating inflation for yourself you would only include items that you use and in ...
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