Inflation

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“Americans are getting stronger. Twenty years ago, it took two people to carry ten dollars’ worth of groceries. Today, a five-year-old can do it.” -Henny Youngman

When you think about annual return, don’t forget to adjust with inflation rate measured by the Consumer Price Index. The net worth may not be as promising as you think.

How about TIPS – Treasury Inflation-Protected Securities? They are U.S. government bonds whose values go up when inflation soars. However, don’t forget about tax part. You still have to add theirs values as taxable income unless they are in tax-deferred accounts such as IRA, 401-k, etc. Also, don’t forget about Greece. U.S. is not likely to default, but nothing is impossible. Some of Greek people already starts to trade common goods to each other (exchange fish for vegetables).

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