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Making Cents: 3% Only Sounds Small . . .

August 18, 1996

If your stocks and mutual funds were worth about the same in 10 years as they are today in nominal terms, that could be a horrifying prospect. That's because even with just 3% annual inflation, the purchasing power of your nest egg would be cut by a third in that period. It would be hard for dividends to make up for that--and it's another illustration of the effects of even small rates of inflation over the long term.

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