Definition Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power over time. It’s a key economic indicator, reflecting how much more expensive a set of goods and services has become over a specific period, usually a year.
Implications Purchasing Power: As inflation rises, the same amount of money buys fewer goods and services, impacting consumers’ buying power.
Interest Rates: Central banks may adjust interest rates to manage inflation, influencing savings, borrowing and investment behaviors.
Definition The Inflation Rate is a critical economic indicator that measures the percentage change in the price level of a basket of goods and services over a specific period. It reflects how much prices have increased in the economy, serving as a key measure of the cost of living and the purchasing power of currency.
Components Several key components contribute to the calculation of the Inflation Rate, including:
Consumer Price Index (CPI): A widely used measure that tracks the prices of a specific set of consumer goods and services.
Definition An investment horizon is the total length of time an investor plans to hold an investment, portfolio or security before cashing it out or selling it. This timeframe is crucial for shaping investment strategies, asset selection and risk management. By aligning investments with their financial goals, risk tolerance and timeframes, investors can optimize their portfolios for growth, income or stability.
Types Investment horizons can vary widely depending on individual goals and needs: