It’s known as an investor’s worst enemy and the silent assassin of savings. It has even been called “public enemy number 1”. All these unflattering titles belong to inflation. A 6% inflation rate will almost halve the value of your money over 10 years — turning, for example, R10,000 into R5,584. After 20 years, your R10,000 will lose 70% of its purchasing power and be worth only R3,118, according to Old Mutual Investment Group. This is why we need our investments to deliver returns that outperform inflation — what’s known as a “real” or inflation-adjusted return. “Inflation is the most important index,” Zain Wilson, portfolio manager at Old Mutual Investment Group, said. He said SA has a high inflation target compared with the rest of the world. The following examples from the “Long-Term Perspectives 2019” report, published by Old Mutual Investment Group, illustrate the impact of inflation on our everyday lives.

A mid-sized family sedan (1600cc) which sold for R272,000 last y...

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