Fiji Times Tuesday 15 August 2017 What is inflation and how does it affect your term deposit?
The price for goods and services usually increases over time, which is called inflation.
Meaning simply, we have to spend more money each year to buy the same amount of goods.
Inflation increases the cost of living and reduces the purchasing power of each dollar.
If you plan to achieve long-term financial goals such as saving for your children’s university fees, or funding your retirement you will need to factor in the effects of inflation. Inflation will cause university fees to increase in the future, so you need to make your savings work for you and earn a decent return, to cover this additional cost.
Investing in a term deposit paying a decent return can help you to safeguard the purchasing power of your money, so long as the interest rate on the term deposit is higher than the expected inflation rate. Read more…
