So, inflation is pretty much when the value of your money decreases, resulting in an increase of prices.
For example... $100,000 in 1987 equals $214,049.77 in 2016, according to this.
But obviously, if they have it in liquid cash, they essentially lost money right? Because the $100,000 is still worth $100,000, correct?
Well, I am reading The Intelligent Investor, and there's something I am not comprehending.
"From the beginning of 1972 through the end of 1981, stocks earned an annual average return of 6.5%. (Graham did not specify the time period for his forecast, but it’s plausible to assume that he was thinking of a 10- year time horizon.) However, inflation raged at 8.6% annually over this period, eating up the entire gain that stocks produced." (Pg. 25).
I am still a noob, but imagine if the $100,000 from 1987 was invested in a farm... and then today it is worth $600,000... did we not profit more because of the inflation?
What I am saying is... aren't investments safe from inflation since they increase at a similar pace as inflation? Investopedia had this topic too.
Submitted February 22, 2017 at 10:10AM by igotlove4every1sueme http://ift.tt/2loJNX8
