Annual Inflation

Today's Livewire released the following statement:

"Annual inflation of 3% per year could reduce your income by one-third over 14 years.  Inflation in Australia is at a level not experienced for decades which is of particular concern to retirees, who don't have a rise in wages to balance out the loss in purchasing power of their investments.  This white paper explores different options available to help protect against unexpected increases in inflation."

This small insight sure hits a cord once you realise what it means in the long term, at the same time striving to build up capital, that will lead to a comfortable retirement.

In a nutshell, the sooner one settles down to make a plan to save, less of the residual savings will be lost to inflation.  The initial goal is to enter the market and, at which level will be dependent on the length of time it takes to build up the capital (deposit), as well as how serious and constant you are with your budgeting.  Each day, when I hear the outcry for "help" for affordable housing, I can feel renters concerns, and at the same time realise I was once in their "shoes", and proceeded to keep going to ensure I would get started in the market at some point in the future.  It is not rocket science, though it is discipline over a long period of time.

In Chapters 4 and 5 of my book I do discuss this initial process, and ways to speed up the budgeting process.

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