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Interest rates on investments take into account estimated inflation, so the $30k already takes into account likely inflation (but would not take into account hi
by rprasad 14y ago
Interest rates on investments take into account estimated inflation, so the $30k already takes into account likely inflation (but would not take into account higher-than-expected inflation).
- arbuge 14y agoHell no. You invest in a 1% CD, you get 1% absolute return, even if inflation is raging in the double digits. Edit: I assume you mean that over time interest bearing account rates rise with inflation. That's true in general, but as the current situation shows, there's no guarantee they're actually even above the inflation level at any point.
- tcgv 14y agoHe means that if you keep spending all of your investment's returns, you'll end up with a fixed income of $30K (1% of $3M) that, due to inflation, will have less purchasing power as the years go by.