Wikipedia defines inflation as a general increase in the price of goods and services.
https://en.wikipedia.org/wiki/Inflation
Retirement Savings
We all dream of the day we can retire and only pursue our dreams or only do fun stuff. However you must save enough over your working years to cover all of the many years of cost during retirement. For some this is 20 or more years for which your retirement savings must cover.
This is hard enough just saving on an annual basis or creating multiple passive income streams that will provide enough money to cover your retirement expenses much less making sure the amount is larger enough to also cover all of the risks associated with living when not working.
Rising Prices
The rising prices of all goods and services have had increases over the past. It is in the news on a daily basis regarding the price of food or gas soaring to record levels.
If the increases are average or below average and consistent year in and year out, they can be easier to predict when trying to determine how to cover the increases. However when prices spike like they have over the past 3 to 6 months, this can impact not only how much you can save on a monthly basis but also the value of your accumulated assets over time.
Inflation Risk
One of the main risk that will impact your retirement savings is that the cost of goods and services (inflation) will outpace the interest rate earned on your retirement funds or Inflation Risk. This risk is important to consider due to the additional savings that you will need over the long term.
Interest vs Inflation
You must make sure that the interest you are receiving is greater than the current inflation rate. Over the last few years, the interest rate on traditional bank savings was just slightly greater than zero but inflation was around 3% (in the USA).
If that is where you have your savings, think again as you are actually losing buying power. Your money is now worth less than it was before. You will not be able to buy as many goods and services as you did in the past year. You will now need to cut your consumption or get another job to stay at the same cost of living.
Hedge Against Inflation
This is where HBD can help. With HBD providing a 20% rate, this is a lot higher than the inflation rate so your buying power will grow over time instead of shrink.
Since HBD is a semi-stable coin on a decentralized platform, the risk is low that it will go away. From all the articles and post that I have been reading about HBD, it is here to stay and will only get more stable over time.
If you talk to financial advisor, they say to always have bonds or a cash equivalent in your retirement savings. Bonds do not get as good of interest as HBD.
Is now the time to sell yours bonds and buy HBD instead?
Not Financial Advice-do your own research before taking action. The above information is for entertainment and education purposes only.
Posted Using LeoFinance Beta
-