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A dollar from 1984 would be worth about $2.30 today. That is equivalent to a yearly inflation rate of 2.82 per year for a total inflation rate of 130.6 percent.
Still only about $200. EE bonds would earn only 4 or 5 cents in 6 months. Savings Bonds at one time were good long-term investments. Not so much today. The bond rate from 2011 to 2013 continues to be very low: from 0.20 to 0.30 percent for EE bonds, and a variable I bond rate (inflation adjusted) of less than 2%.
The most damaging effect is the fact that people lose their life savings. People always deposit their hard earned money and savings in banks and if banks fail, they will lose their money and their life's would be ruined.
If Roxanne had $300 in her savings account which had a 5% APR, her balance after one year would be $315. You would calculate this by multiplying 300 by .05, which equals 15, and add that to the original balance of 300.
One can find tips on what to do with money savings from a number of places. One place would be to check financial magazines that contain tips on savings and investing.
What effect would inflation have on a company's cost of capital
The 12 percent nominal interest means that your money will increase in value by 12% in a year's time in NOMINAL terms.However, the inflation rate of 13 percent says that the cost of goods will increase faster than the value of your deposit.Hence the REAL effect is that the value of your money will fall by 1 percent.
...savings account be worth if inflation goes up? (For this exercise, do not consider interest paid.)
If you took the annual inflation of 3.32 percent and took $1 from 1980, it would be worth $3.03 in 2014. The total inflation is over 200 percent.
5
Inflation has increased by around 5.7 percent since 1972. A dollar in 1972 would be equivalent to $5.7 in 2014.
We cannot say that the interest rate on our savings account should be greater than the rate of inflation, but we can say that the interest earned on our overall savings or investments should be greater than the inflation rate. That is because: Let's say you invested Rs. 100 in a bank that gives you 3% interest every year, which means your 100 would have grown to be 103 by the end of the year, but if the country's inflation rate if say 8%, something that was 100 rupees last year would be costing 108 rupees now which means your money has effectively lost its value. That is why we must invest in instruments that give us returns that are alteast greater than the inflation rate.
A dollar from 1984 would be worth about $2.30 today. That is equivalent to a yearly inflation rate of 2.82 per year for a total inflation rate of 130.6 percent.
The amount saved would be $163.35
This is a savings of $10.50 so your final cost would be $59.50.
$330.00
The amount saved would be $9.00