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INFLATION
What is INFLATION?
MONETARY INFLATION IS THE LOSS OF BUYING POWER DUE TO THE CONSTANT INCREASE IN PRICE OF GOODS AND SERVICES.
The following is a demonstration of inflation in real life:
When I was a young Constable in the South African Police in 1946 the following commodities and services were priced as follows:
Bicycle cost ten rand (Five Pound)
A new men's suit cost then rand (Five Pound)
Board and Lodging for a month was about ten rand ( Five Pound)
This left me with ten rand poscke money (Five Pound)
Ten Rand in 1946 was the equivalent of Five Pound. The Pound was phased out later.
My monthly remuneration in 1946 was Twenty Pound (Forty Rand).
In today's terms Four Thousand Rand buys the Goods and Services depicted above. This is the equivalent of an increase of 100 times forty which equals R4000-00.
If you invested Forty Rand in South Africa in 1946 it would probably be worth Four Thousand Rand today.
The rate of inflation tends to increase in tandem with the interest earned on investment.
So investment in a bank appears to be a good thing, yes but factor in the tax payable on income earned and you will find yourself in negative equity territory.
HOWEVER IF YOU NEGLECT TO INVEST DISCRETIONARY FUNDS YOU WILL FIND YOURSELF IN DIRE STRAITS WHEN YOU HAVE TO RETIRE.
SIDNEY COAD WILLIAMS
HEALTH AND PEACE ACTIVIST.
MONETARY INFLATION IS THE LOSS OF BUYING POWER DUE TO THE CONSTANT INCREASE IN PRICE OF GOODS AND SERVICES.
The following is a demonstration of inflation in real life:
When I was a young Constable in the South African Police in 1946 the following commodities and services were priced as follows:
Bicycle cost ten rand (Five Pound)
A new men's suit cost then rand (Five Pound)
Board and Lodging for a month was about ten rand ( Five Pound)
This left me with ten rand poscke money (Five Pound)
Ten Rand in 1946 was the equivalent of Five Pound. The Pound was phased out later.
My monthly remuneration in 1946 was Twenty Pound (Forty Rand).
In today's terms Four Thousand Rand buys the Goods and Services depicted above. This is the equivalent of an increase of 100 times forty which equals R4000-00.
If you invested Forty Rand in South Africa in 1946 it would probably be worth Four Thousand Rand today.
The rate of inflation tends to increase in tandem with the interest earned on investment.
So investment in a bank appears to be a good thing, yes but factor in the tax payable on income earned and you will find yourself in negative equity territory.
HOWEVER IF YOU NEGLECT TO INVEST DISCRETIONARY FUNDS YOU WILL FIND YOURSELF IN DIRE STRAITS WHEN YOU HAVE TO RETIRE.
SIDNEY COAD WILLIAMS
HEALTH AND PEACE ACTIVIST.
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