How to use it
- Use the formula below with your own figures.
The formula
Future power = amount ÷ (1 + inflation)ⁿ.
Worked example
Cash loses value in real terms as prices rise.
Frequently asked questions
Why hold less cash?
Inflation quietly erodes it.
What protects power?
Assets that grow at or above inflation.
Tips
- Compare money across years in real terms.
- Hold assets that grow at or above inflation.
- Cash quietly loses value when prices rise.
Key terms
- CPI
- A price index for a basket of goods.
- Real return
- Return after inflation.
- Purchasing power
- What a sum can actually buy.