Re:I Just Gave Up $4000 Per Month to Keep My Freedom of Speech
by slig on Thursday June 21, 2012 @08:43PM
(#4144884)
In this case, how much of the 4k should be re-invested to counter the inflation?
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Re:I Just Gave Up $4000 Per Month to Keep My Freedom of Speech
by Retric on Thursday June 21, 2012 @09:00PM
(#4144934)
That's a function of both inflation rate and your expected ROI. Using 3% inflation and 6% ROI you need to reinvest ~51.6% of your income to break even. (1-(ROI-((1/(1-inflation rate))-1)))/ ROI = 1-(.06-((1/(1-.03))-1))/.06 = ~51.6%
Edit: Ok there must be a simpler way to write that...
((1/(1-inflation))-1) / ROI = ((1/(1-.03))-1)/.06 = 51.6%
PS: Just keeping what left over when you subtract the inflation rate from your ROI is close and you don't actually know the inflation rate or your long term ROI most of the time.