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How is Inflation Relevant? Inflation has an impact on our plans for
future. When saving for retirement, college, a house, or simply budgeting for
next 12 months,
cost of goods and services have a direct impact on your goals. Due to inflation, your goals may cost more in
future than today. A meal that costs $10 today may cost $10.36 in one year. A car that costs $10,000 today may cost $10,359 in one year, and almost $12,000 in only 5 years. So, when planning for
future, you must consider inflation and
effect it may have on your goals.
Ways to Combat Inflation One way to overcome prices that may rise due to inflation is to make your money grow at a rate higher than inflation. For example, if inflation is 3.59% annually, you will need to make your money grow at 3.60% or higher. Otherwise, though you may be saving and investing toward your goals, you may never actually achieve them.
Many investments provide a vehicle for "outpacing" inflation. Generally, stocks and bonds have historically earned an annual rate above inflation. Through careful planning and investing, it is possible to overcome inflation and its impact on prices.
In summary, a plan that does not account for inflation is in danger of failing. Therefore, it is important to remember inflation and invest in assets that will enable you to achieve your goals despite
effects inflation may have on
cost of goods and services.

About The Author: Jonathan Citrin provides financial goal planning services. Go to http://articles.citringroup.com for hundreds of educational articles about Personal Finance, Retirement Planning,Investment Planning, and College Savings.