Inflation. There is so many articles written about inflation, explaining benefits and downsides of it.
What does it mean for an investor? Part of the budgeting is not only see how are you doing now and where the money goes to, but to have vision how to get from A to B.
Using my portfolio I will demonstrate clearly how does it mean an additional 10 (ten) years of work. The prospects and planning without taking inflation into account are rosy and glamour:
This means, that should I keep my contributions at $40 K a year, I will reach my target of financial Independence ($60 K a year from my investments at 3% interest) between 2033 and 2042, depending on the stock market performance.
My emergency fund and precious metals are not contributing towards growth - I use interest rate for the savings account at the inflation rate. It does not exactly right, but it simplifies.
This is a bit disappointing but let's have a look at the inflation adjusted scenario: