The Silent Wealth Killer
Inflation is the rate at which the general level of prices for goods and services is rising. As inflation rises, every unit of currency buys a smaller percentage of a good or service. Essentially, your money is leaking value every single day.
Real World Example
If a cup of coffee costs $5 today, at 3% inflation, it will cost roughly $9 in 20 years. This means your savings account earning 0.5% interest is actually losing purchasing power.
How to Beat Inflation?
- Invest in Equities: Historically, stock markets (S&P 500 or Nifty 50) have beaten inflation over long periods.
- Real Estate: Property prices and rentals often rise with inflation.
- Gold: Often considered a hedge against currency devaluation.
Frequently Asked Questions
What is the average inflation rate?
In the United States, the historical average is around 3-3.5%. In India, it typically hovers between 6-7%. This tool automatically adjusts defaults based on your selected region.
How does inflation affect retirement?
Crucially. If you need $50,000/year to live today, in 20 years at 3% inflation, you will need ~$90,000 to maintain the SAME lifestyle. You must plan for this.