Hankinson Wealth Management, Inc. - Augusta, GA

Lake Oconee Office

1041 PArkside Commons Suite 103, Greensboro GA 30642

PH (706) 454-0790

Contact Us

Investment Read Time: 1 min

Inflation and the Real Rate of Return

The real rate of return is an important personal finance concept to understand.

It’s the rate of return on your investments after inflation. The real rate of return indicates whether you are gaining or losing purchasing power with your money.

So if inflation checks in at a rate of 6%, does that mean any investment with less than a 6% rate of return is losing purchasing power?

That’s where it gets a little complicated.

In theory, any investment with less than a 6% rate of return may lose purchasing power. But there are other factors you want to consider as well. For example, are inflation rates likely to continue their current trend, or are they transitory effects of broader market changes?

In the end, the real rate of return is only one factor to consider when building a portfolio. Your time horizon, risk tolerance, and goals are the primary drivers.

A financial professional can help you better understand market conditions and build an investment strategy that manages the potential loss of the purchasing power of your money.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

 

Related Content

Problems with Probate

Problems with Probate

Probate can be a completely public process, or it can be managed to include as little information as possible.

Raising Healthy Children

Raising Healthy Children

Healthy habits are one of the greatest gifts to give your child.

A Living Trust Primer

A Living Trust Primer

Living trusts are popular, but their appropriateness will depend upon your individual needs and objectives.