Unraveling the Mystery of Investing #3

Inflation Risk


Inflation risk is the danger that inflation will reduce the purchasing power of your investment over time. Low-yielding investments such as savings accounts and money market funds may not earn enough to outpace rising prices.

Content © Rich Brott, 2011

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I suppose that’s one of the reasons we want our money to circulate into the economy. If we just sit on it (and leave it unattended in a savings account), it serves no purpose and loses value.