Topic Guide
What Is Inflation?
Inflation is a subject covered in depth across 2 podcast episodes in our database. Below you'll find key concepts, expert insights, and the top episodes to listen to — all distilled from hours of conversation by leading experts.
Key Concepts in Inflation
Compounding interest
Compounding interest is the process where the interest earned on an investment is reinvested, allowing it to earn interest itself, leading to exponential growth. The episode highlights that money kept at home has "zero compounding interest," while investing $300,000 at 10% could turn it into "almost $2 million" in 17 years.
Inflation
Inflation refers to the rate at which the general level of prices for goods and services is rising, causing the purchasing power of currency to fall. The episode emphasizes that keeping cash at home means its value is "almost negative" because "inflation" constantly depletes its purchasing power.
What Experts Say About Inflation
- 1.A tax refund from the IRS is essentially a 0% loan you've given to the United States government.
- 2.Getting a tax refund indicates you overpaid the IRS throughout the year.
- 3.Overpaying taxes makes you effectively poorer due to inflation, as your money loses value without earning interest.
- 4.For example, something costing $100 today could cost $103 next year due to inflation.
- 5.The IRS provides a tax withholding calculator, created during the pandemic, to help individuals determine the correct amount of money to withhold.
- 6.Using the IRS tax withholding calculator can prevent you from overpaying taxes to the government.