Question

An alternative to saving would be investing your money for a higher rate of return. How would this work to reduce the impact of inflation on your savings?.

Answer 1

With inflation, the rule works in reverse: Consumers can approximate how quickly higher prices would halve the value of their savings. To do this, divide 72 by the annual inflation rate. Using this formula, consumers' money would halve in value in roughly 8 to 8½ years. (Seventy-two divided by 8.6 equals 8.37.)