In other words, we've seen that cash is a reasonable form of ballast, but only if it's held for short durations, when
the compounding effect of inflation is relatively small.
Not exact matches
While
compound interest adds to the cost
of a loan, the constant
effect of inflation works in the opposite direction.
Considering
inflation, and the
effects of compounding, why would I want to give up a passive income
of 8 %?
While
compound interest adds to the cost
of a loan, the constant
effect of inflation works in the opposite direction.
In Laying a Foundation you'll learn about how money grows —
compounding, the rule
of 72, the
effect of inflation — and why higher rewards always come with greater risks.
Method 2 only realises
inflation at the end
of the holding period, but still accounts for the
compounding effect against the dollar over time.
Even if
inflation did not exist, the
effects of compound interest make it well worth one's time and effort to invest in the stock market.