Breaking Even

 So here is a little problem for those looking at investing

money in these odd times. 

Q- Does investing something at 2% compensate for 2% inflation

in the coming year.

A- No, it does not!!!

The numbers:

                                       

Over 5 years, 1000$ invested at 2% cumuative in the face of 2% inflation

will loose 2$ in value. 

Where is the break-even point??

                                                         *     *     *

Easy enough:

                                                             

                                                           

It's all about what we are taking 98% of... We are discounting our

investment after its return as been added. The rate of interest or return

offered has to be higher than that of inflation to break even!