Does anyone ever think about the inflation equation when they're young ?
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Does anyone ever think about the inflation equation when they're young ?
I never really planned on retiring early, but when I look back at how I dropped out of school at 15 and retired at 39 I often think what made it all happen ? I know what made it all happen other than being somewhat disciplined with money and some ambition. It was the fact that I beat inflation by about 7 years. I bought 6 houses starting at the age of 22 and I know that if I would have stayed in class for say another 7 years I would have lost massive time towards inflation and would have only been able to buy maybe 1 to 2 houses. Who knows they got soooooooo expensive in the Portland Oregon area where Im at I might have been able to buy zero houses. I think that people discount and really dont think about inflation much and it really should be the 1st thing that they think about.
Re: Does anyone ever think about the inflation equation when they're young ?
After skimming over the title of the post I was sure you meant whether we ever think why most (nearly all?) popular books/articles/blogs/etc. subtract inflation from nominal return to get the real return (i.e. why r=n-i) when logic tells us that we should have been dividing (i.e. r=(1+n)/(1+i)-1). The answer, of course, is that they use first-order Taylor approximation.
Anyway, still a good question. I started thinking about inflation seriously (in terms of what it means for my own economic situation) quite late, when I was around 25 (maybe 24).
Anyway, still a good question. I started thinking about inflation seriously (in terms of what it means for my own economic situation) quite late, when I was around 25 (maybe 24).