What is Inflation?
Inflation is the rate at which the general level of prices for goods and services is rising, and, consequently, the purchasing power of currency is falling. Central banks attempt to limit inflation, and avoid deflation, in order to keep the economy running smoothly.
The Hidden Thief
Inflation is often called the "hidden thief" because it erodes the value of your savings silently. For example, if the inflation rate is 6%, an item that costs $100 today will cost $106 next year. This means your $100 will buy less than it does today.
Why Calculate Inflation?
Understanding inflation is crucial for long-term financial planning. If you are saving for retirement, you need to account for the fact that the cost of living will be much higher in 20 or 30 years. Your investment returns should ideally be higher than the inflation rate to ensure "real" growth in your wealth.
Using the Inflation Calculator
Our calculator allows you to see the future value of a certain amount of money based on a projected inflation rate. Conversely, you can also see what a future amount is worth in today's dollars. This perspective is vital for setting realistic financial goals and adjusting your investment strategy to protect your purchasing power over time.