Fact 1: Inflation erodes purchasing power
$10,000 today = $5,521 tomorrow?!1
1. Assume $10,000 eroded over 30 years at inflation rate 2% p.a.
Calculations assume no returns earned on the $10,000
Fact 2: Inflation is difficult to predict
Key drivers of inflation (eg oil) could remain volatile and one has to be prepared
for unexpectedly high inflation
Source: Bloomberg, International Monetary Fund (IMF) World Economic Outlook reports, Monetary Authority of Singapore
