Overstated: Inflation Risk

[snafu]

no inflation? My utility bills tell me otherwise! If I were on a fixed income as many seniors are... I'd be worried about paying heating this winter and anything the government controls. I went shopping with a friend who needs to replace her fridge and nearly fell over when I saw the price has doubled in 4 yrs. [when I last bought appliances].

The stock market will recover, valuations have always bounced around...but it is important to read the newspapers and know what's happening which affect your holdings whether actively managed or in some type of retirement plan and diversify to reduce risk.

[PetMom]

You guys keep a person on their toes with wording written quickly (which makes this forum so fascinating) but I will stand by it:

Inflation eroding the buying power of your money in your investment is a loss.

I am referring especially to govt. securities. These pay a ridiculously small amount. Finance writers have joked you would be better off with putting your money under your mattress with the rates available this past year. One guy was calling it a mattress investment (especially the T bills).

Notice how certain basic expenses have inflated through the roof.

Wasn't there some big auction for treasury notes or bonds recently and it was a big deal they were bringing in just over 4%.

Yet, I went to the grocery store and bell peppers (not even organic) have hit $1.69 each. Go to the always low costing potatoes and there are new pototoes @ 1.5 pounds for $2.98. The cheapest loaf of bread you can find at Wal Mart is now $2.78.

Things we don't really need are staying the same or cost less and things we really need eg utitilities, food, medical insurance are inflating far quicker than any govt. bond.

[Broken Arrow]

Hehe, sorry if I got too picky. Diversification is a two-parter, so in a way, we're all correct.

[EEinNJ]

Inflation is very real and the government does not accurately measure it with the CPI. Many things like fuel, health care, tuition, insurance, taxes, and fees are going up at a much higher rate than is officially acknowledged.

Fixed income investing can be like treading water, but making a few percent that compounds every year is a lot better than being down 25-50% after years of equity investing.

Owning you own home is probably the best hedge against inflation, though property taxes are a spoiler (mine are up 25% over 5 years).

[JBinKC]

The government can easily manipulate inflation figures by using hedonic regression methods.

The reason why people are noticing the impact of inflation is the rate has been much higher for basic needs than for unnecessary wants.

[kv968]

KV,

Fair enough. . .I just hold you all 50% responsible.

Now cough up my losses. . .

Scanner, no problem buddy, as soon as I can hack up some of mine first