Investing Principles: Understanding Inflation

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Published 6 May 2008
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If you’re a glass half full sort of person – you see inflation as GOOD - that goods and services are gettin...
If you’re a glass half full sort of person – you see inflation as GOOD - that goods and services are getting more valuable, equaling higher prices.If you’re a glass half empty sort of person – you see inflation as BAD – that the dollar’s buying power is withering. Fact is, inflation does erode the purchasing power of your money. Inflation grows an average of 3% a year …sometimes more, sometimes less, always averaging out to 3. Sure, your dollar buys more if prices drop… but deflation tends to happen during economic trouble, high unemployment, slowing production.  Not good times.
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