We often hear questions about rising interest rates and how those may impact investments. Will inflation pick up? How quickly will the Fed taper? Is the economic recovery robust? These are all questions which certainly impact the markets’ expectation of future interest rates. Continue reading
Source: DFA Returns 2.0. Past performance is no guarantee of future results. Assumes reinvestment of income and no transaction costs or taxes. This is for illustrative purposes only and not indicative of any investment. Stocks are represented by the CRSP 1-10 Index; Bonds are represented by the Ibbotson/SBBI Long-Term Government Bonds Index; Inflation is represented by CPI. Indexes are unmanaged baskets of securities that are not available for direct investment by investors. Index performance does not reflect the expenses associated with the management of an actual portfolio.
A couple of weeks ago we shared a chart illustrating how prices on goods have changed in the last 30 years due to inflation. Today, we’d like to share another way inflation can affect us—on our investment returns.
Very few of us have enough money today to pay for everything we will need in the future, especially when prices of goods and services rise by an average of 3% per year. Given that fact, we must invest our money with the goal of combatting that erosion of purchasing power that occurs over time.