Inflation

To explain this term in a simple way is not simple. Basically, inflation is the loss of the value of money. There is a rise of prices, an additional volume of money, resulting in a loss in the value of currency. I think that's the only way I can make it very simple.

Did you know that every year...the inflation rate is an average of 2%? Yes! Sometimes, it is even a lot more higher! In short, the Canadian dollar is losing its value every year. Hard to believe? Why do you think inflation happens? Inflation relates to the loss of purchasing power of you money over time.

Well, I don't think you see inflation as a big, big problem, but I'll tell you something. Inflation is like rust. At first, you hardly notice it happening. Then, as time passes, its builds up and eats away your savings!

If you don't have a clear picture, I'll give you an example. Let's say the inflation rate is at 4%. That means after 10 years, the purchasing power of $1,000 will drop to about $600!

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