Skip to main content
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 ...
mhoran_psprep's user avatar
61 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 ...
Pete B.'s user avatar
  • 76.7k
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 ...
TTT's user avatar
  • 47.2k
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 ...
quid's user avatar
  • 49k
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 ...
JohnFx's user avatar
  • 53.1k
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 ...
Magua's user avatar
  • 5,097
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 ...
Hilmar's user avatar
  • 7,914
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/...
JTP - Apologise to Monica's user avatar
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 ...
Manziel's user avatar
  • 7,442
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 ...
JTP - Apologise to Monica's user avatar
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 ...
Chris Degnen's user avatar
  • 9,877
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 ...
BrianH's user avatar
  • 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 ...
Andrew Lazarus's user avatar
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 ...
Jay's user avatar
  • 22.8k
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 ...
user2371765's user avatar
  • 1,084
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 ...
xyious's user avatar
  • 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, ...
yoozer8's user avatar
  • 9,513
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 ...
DJohnM's user avatar
  • 4,294
11 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 ...
RonJohn's user avatar
  • 50.7k
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 ...
D Stanley's user avatar
  • 137k
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 ...
quid's user avatar
  • 49k
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 ...
IMSoP's user avatar
  • 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 ...
littleadv's user avatar
  • 177k
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 ...
JTP - Apologise to Monica's user avatar
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 ...
CrimsonX's user avatar
  • 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 ...
Hart CO's user avatar
  • 70.5k
8 votes

How does a monthly inflation rate work?

According to the link you provided, these inflation numbers are the year-over-year inflation amounts for a given month. For example the February number of 7% means from February 2015 to February 2016 ...
quid's user avatar
  • 49k
8 votes

Is gold subject to inflation?

The general argument put forward by gold lovers isn't that you get the same gold per dollar (or dollars per ounce of gold), but that you get the same consumable product per ounce of gold. In other ...
AndyT's user avatar
  • 821
8 votes

Why is inflation incorrect

CPI tracks the cost of a fixed bundle of goods, intended to represent the purchases of a 'typical' person. However some things are excluded - mortgage, maybe rent, and some goods with volatile pricing....
DJClayworth's user avatar
  • 33.6k
8 votes

Why would I ever put my money into a savings account that returns less than the current inflation rate?

Saving in a bank account that pays less than the rate of inflation isn't a risk. If inflation is 2%, and you get interest of 1%, then you will lose 1% of value per year. That isn't a risk - you know ...
Simon B's user avatar
  • 10.4k

Only top scored, non community-wiki answers of a minimum length are eligible