Thread replies: 9
Thread images: 2
Thread images: 2
File: 26272052a8c50a7a9e811f96fc1e3e55.jpg (54KB, 500x373px) Image search:
[Google]
54KB, 500x373px
If I were to invest $10,000 over the next 20 years at an interest rate of 5% with compounding interest, I'd get about $53,000 at the end of it. But those $53,000 would be worth much less than today's $53,000 because of inflation. How do I calculate that precisely, assuming an average inflation rate of 3%?
Sorry for being a retard.
>>
Well, five percent minus three percent is two percent, your actual growth rate. Wow, that was tough
>>
>>1484898
thanks for showing me, I was working on this for one of my advanced finance courses and got stuck.
>>
>>1484926
HAHAHAHAHHAHAHA
>>
>>1484926
this is troll.
>>
>predicting inflation rate 20 years from now
It's like you don't even listen to Ron Paul
>>
So I understand that profit (interest) and loss (inflation) just cancel each other out, but how is the initial investment's (10k) purchasing power affected by inflation? Nominally, the 10k will still be 10k in 20 year's time, but it's purchasing power will be much reduced because of inflation. Please explain.
>>
File: Screenshot_20160905-231455~2.png (43KB, 1080x322px) Image search:
[Google]
43KB, 1080x322px
>>1484395
He's wrong but not too far off. Real return equals rate of return over inflation rate. (1.05^20)/(1.03^20) = 1.469 or 46.9%. slightly different than 1.02^20 = 1.485 or 48.5%.
>>
>>1486279
This.
It's called the Fisher Effect.
http://www.investopedia.com/terms/f/fishereffect.asp
Thread posts: 9
Thread images: 2
Thread images: 2