The Downside of Saving Money

Money is ever shrinking and It is not getting any bigger. The Fed's have even recently had the deal with the whether the debt ceiling should be raised. When something is going to reach a ceiling, you know something is wrong.

Inflation is ideal and in the norm at 3% a year.

This is the total increase of average prices or goods. Seeing an increase in gas from 3.00 to 4.00 a gallon does not mean that the economy is experiencing inflation.

Over the pass 5 years are so, we have actually experienced lower than expected inflation. In comparison to previous years, this is good for the dollar; however, it's still bad news for people who have most of there money stocked up in saving accounts.

Inflation means the average rise in prices for consumer goods and services. What does this mean of the U.S. dollar?

The U.S. dollar begins to becomes more worthless.

An example would be this: You pay an average internet bill of 30 dollars last year. This year the bill is up to 40 dollars. The reason for this could simply be that they need to money to invest in better technology. Another reason that some would state is that the dollar is weaker and can afford to buy less. A better example would be .5 cent candy, compared to the now .85 cent candy.

Its not because of increased technology or debt either from technological investments.

For instance, Hershey's Profit margin has gone from about 3.5% in 2007 to around 10% in 2012

My suggestion to you is to purchase things that will rise with or even better than inflation.

This being Stocks, Bonds, Bank notes, ETFs, Mutual Funds, CDs (Certificates of deposit).

Suggestion for new investors: Invest in Mutual Funds, where fund managers have a set selection of stocks that are proven to rise annually whether it be from 7% to 15%, anything is better than losing to the power of inflation.

Better yet, anyone making under $112,000, or between $178,000 to $188,000 with a spouse can open a Tax-free retirement account called a Roth IRA. A Roth IRA is very similar to a 401k; however, it isn't something that your employer offers. It is an individual account or a shared account which you may share with a spouse. Currently, it has a maximum annual contribution limit of $5,500 ($6,500 if over 60). The account can't be accessed until the age of 59 and 1/2.

at 12:04 AM
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