Your Money and the Inflation Rate in 2009
I am a Money Magnet! We are Money Magnets!
How is your money fairing with the Inflation rate?
To simplify matters, personal finance coaches would simply say that your money should be invested in instruments that would give you higher yields than the inflation rate. This way the purchasing power of your money is preserved. However, this statement is incomplete and lack some details that you might be interested in. Read on to find out what I found out.
Sometimes knowing more can be truly depressing. This case is of no exception. While studying economics, my professor made me realize that Inflation rate is an index and as such only depicts an average value. This means that the published inflation rates may not necessarily apply to us who consume things that are not generally part of the average consumer's basket. Like especially for money magnets like us who have the privilege of being connected online, the chances are, only a portion of what we regularly consume is part of the items being considered in computing for the inflation rate. Things like personal computers, laptops, a cup of specially brewed coffee, your favorite pastries and cakes, are not part of this computation. This means that inflation rate for us is way much higher than the published rates! Therefore in order for us to preserve the purchasing power of our money, we must work doubly hard.
As of June 2009, the year to date inflation rate is already at 5%. However, for July, the inflation rate is expected to be only at around 0.4%. This will bring down the year to date rate to 4.34%. That is certainly good news.
For us money magnets, aim at achieving at least 2% higher than the published rates! I think this gives us enough leeway to ensure the preservation of our money. With time deposit rates only lurking at around 3-4% p.a., they don't appear to be very wise investments as of the moment.
As a last note, knowing things like this can sometimes bring your spirit down. I say, don't be. Let it challenge you to strive more instead. Digest what you have learned and try to apply it in the future. Instead of feeling down, feel good knowing that now you know better.
Wishing all you money magnets out there more powerful ways to attract money and wealth soon.
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