Inflation rates

[harryagain]

What is means shitferbrains is that one in ten of the population are migrants, ergo they are fifty percent more likely to be criminals compare with natives.

[Adrian]

Damn that Cliff Richard and Joanna Lumley.

[Adrian]

Oh, and BTW... your numeracy skills are clearly on a par with your logical reasoning skills.

[harryagain]

There's two we could do without.

Down to answering your own posts now?

[amyron]

replying to Jim Hawkins , amyron wrote: There's been a ton of discussion about how Americans do not save enough cash. While it is certainly true that frivolous spending is bad, what a lot of people don't understand that they really lose money if they save it. The reason has to do with inflation, which makes most savings accounts almost pointless to have.

[Mark]

If you believe the personal debt figures for the UK you could conclude the same here.

If the interest rates are lower than inflation then you are correct. Although this is the situation now it has not always been the case and probably will change in the future.

[Adrian]

Even then, it's really not that simple.

Let's say that you're saving £100/month. You have £2000 in a savings account. For simplicity, let's assume that interest is zero and inflation is 2%.

This time next year, your £2000 will buy you 2% less than it would today. Possibly, assuming inflation is flat across everything you might buy. But, of course, you won't have £2000 in the bank. You'll have £3200 in the bank - and that'll buy a lot more than £2000 will buy today.

OK, you could have spent that £3140 today and bought the same thing £3200 would buy you in a year's time - saving £60. But you wouldn't have saved £60, since you'd have had to have financed the other £1140 - which would have cost a lot more than £60 in interest.

[Vir Campestris]

Or I could spend the £2K now, buying one thing which in a years time would cost me £2040, and buy another thing then for the £1200. And I'm £40 better off.

Or suppose I can save that £1200 a year, and the thing I want to buy is £100,000. At the end of the year it will have gone up to £102,000 and is even further out of reach.

Andy