Inflation, and It’s Impact on You

Inflation has been relatively low for several years, but now, it is being monitored closely.A topic that I have not discussed for several years is now a cause for concern again. That topic is inflation. Inflation has been relatively low for several years, but now, it is being monitored closely. We can see inflation in lumber prices, real estate, and gasoline over the last few months among several other items. What is Inflation:

In economics, inflation (or less frequently, price inflation) is a general rise in the price level of an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy. The opposite of inflation is deflation, a sustained decrease in the general price level of goods and services. The common measure of inflation is the inflation rate, the annualized percentage change in a general price index, usually the consumer price index, over time.

Inflation is dangerous to those people living on a fixed income, normally retires. One of the very few places to generate income that outpaces inflation is in the equity markets which is a problem for people who have low risk tolerance. The solution can be found many times in diversifying across liquid and illiquid investments such as equities and fixed annuities. Every person’s situation is different and there is not a one size fits all solution. I encourage you to review your personal plan now. You can reach us at 888-226-7614.

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