Question

Historically, prices increase an average of 3% to 4% per year. That means if your investments...

Historically, prices increase an average of 3% to 4% per year. That means if your investments average a 4% return or less, you lose what?

Group of answer choices

Portfolio Strength

Investments

Purchasing Power

Interest

Money

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Answer #1

We lose purchasing power if the prices increase on an average of 3% to 4% per year and our investment returns 4% or less. Our money would be worth less than what it was an year ago even if our investment returns 4%. This is because of inflation.

Portfolio Strength is not affected by inflation.

We do not lose our investment if our investment returns 4% or less

We do not lose interest if inflation increases

We do not lose money because our investment grows by 4%

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