Secrets Of Inflation

Inflation is often portrayed in the media as a bad thing, however, it is a necessary ingredient for our lives to operate in a smooth manor. While none of us likes paying more for products, inflation, in and of its self is not necessarily a bad thing. For example, stock market beginners need to know in real estate inflation allows our home value to increase while the payment remains fixed.

The following example shows how inflation can actually be helpful.

Bob and Marie bought their first home in 1989 for fifty four thousand dollars. The home payment, which includes the insurance premium and the taxes, were four hundred dollars each month.

In the summer of 2006, Bob and Marie were thinking of selling their home and had it appraised. The value of the home was appraised at two hundred eighty seven thousand dollars. Bob and Marie had a house payment at this time of four hundred and sixty dollars.

Inflation has been helpful to Jack and Sue. Not only has the value of their home grown, their take home pay has doubled and their home payment has remained almost the same.

In the years 2007 through 2009, inflation has dropped and the United States has been in a recession. The value of their home is now one hundred fifty five thousand dollars. The payment is still five hundred and forty dollars. There has been no inflation during these years and the home has lost value, even the home payment has remained about the same.

Runaway inflation is hurtful for most people. For those on fixed incomes, it is especially difficult. However, some inflation helps our lives to flow smoothly.

Balanced inflation allows property and investments to grow. Prices also will increase slowly but so do paychecks. This is sometimes referred to as balanced growth.

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