Inflation: the invisible risk
Most people think of investment risk as the chance that they
will lose money, but there is another type of risk that, although
less apparent, is just as hazardous to your financial future.
Inflation Risk is the negative impact inflation has on the
purchasing power of money. Even in the reasonably stable
inflationenvironment North America has enjoyed in recent years,
inflation still grinds down the value of a dollar over time.
For instance, assuming a rate of inflation of 3% over 25 years,
the purchasing power of a dollar would be cut in half. That means
the bag of groceries that currently costs $20, would cost $40 in 25
If your investments are not providing real returns in excess of
the rate of inflation, your purchasing power is eroding over