@NicosMind : No. He didn't get into inflation at all but the concept that he's talking about can be applied to inflation but in an inverse way: inflation hovers around 5 percent per year. So you should take that into account when making long term investments.
This video basically took a long time to say: 100 dollars now is the same as 100 dollars plus interest a year from now.
@freezazoid Well its because "This video basically took a long time to say: 100 dollars now is the same as 100 dollars plus interest a year from now" is why i asked about inflation. Cause thats what he was getting at. That if you buy a bond with 3% interest all youve done is saved your purchasing power... Well almost preserves your purchasing power.
Plus i never trust government stats on inflation. Its always higher.
@NicosMind : yeah totally. I haven't properly researched the recent interest rates but i'm guessing the last few years has been about 5 or 6 percent. The figures the government claims is generally lower than the actual inflation rate. Seems like ten years ago I could buy a can of soda for about 50 or 60 cents... now it costs about a buck. you do the math.
@NicosMind If the interest rate is 3% then that is the nominal interest rate - i.e. the one that you would see and speak about. Inflation could be 1% or 2% or any other percentage - if inflation were 3% then the real interest rate would be 0%, i.e. in real terms you would not be getting richer. This example is just about present and future values and these are all in nominal terms - it does not make any assumptions regarding interest rates. I hope that helps, Michael.
Sounds like youre saying if the interest rate is 3% then inflation is 3%. Is that right?
NicosMind 1 year ago
@NicosMind : No. He didn't get into inflation at all but the concept that he's talking about can be applied to inflation but in an inverse way: inflation hovers around 5 percent per year. So you should take that into account when making long term investments.
This video basically took a long time to say: 100 dollars now is the same as 100 dollars plus interest a year from now.
freezazoid 1 year ago
@freezazoid Well its because "This video basically took a long time to say: 100 dollars now is the same as 100 dollars plus interest a year from now" is why i asked about inflation. Cause thats what he was getting at. That if you buy a bond with 3% interest all youve done is saved your purchasing power... Well almost preserves your purchasing power.
Plus i never trust government stats on inflation. Its always higher.
NicosMind 1 year ago
@NicosMind : yeah totally. I haven't properly researched the recent interest rates but i'm guessing the last few years has been about 5 or 6 percent. The figures the government claims is generally lower than the actual inflation rate. Seems like ten years ago I could buy a can of soda for about 50 or 60 cents... now it costs about a buck. you do the math.
freezazoid 1 year ago
@NicosMind If the interest rate is 3% then that is the nominal interest rate - i.e. the one that you would see and speak about. Inflation could be 1% or 2% or any other percentage - if inflation were 3% then the real interest rate would be 0%, i.e. in real terms you would not be getting richer. This example is just about present and future values and these are all in nominal terms - it does not make any assumptions regarding interest rates. I hope that helps, Michael.
savingandinvesting 1 year ago