Inflation _ The silent killer
Inflation is the rise in prices of goods and services over time.
When prices increase, your purching power decreases. For example if the inflation rate is 3.5%, your $100 today will only be worth $96.5 next year.
Inflation is a major factor to consider when you build upp your financial future. For instance, if you put your money in an account with a zero rate of return, its value will certainly decline in the long run.
In 2018, the average inflation rate in Canada was approximately 2.27% compare to previous year.
What will your $100 do in the next 20 years? assuming the inflation rate is 3%:
Years from now Purchasing power Amount equal to
$100 of today
5 $86 $116
10 $74 $134
15 $64 $156
20 $55 $181
Say you plan to retire with $4000 income per month in today's value. 20 years later, at a 3% inflation rate, you will need to have $7,224 per month to maintain the same purchasing power. Are you prepred for it?
Do you think that you should save more and spend less?
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