(post copied from SA)
For my annual review I take inflation rates to track the buying power of my capital basis ( = money sent to the broker).
Yesterday, our federal institute of statistics [1] published an inflation rate of 3.1% for 2021.
Since I started DGI in 2015, the capital inflation correction now adds 4.9% to the capital basis.
For 2020 inflation was 0.5%. Thus, the 3.1% of 2021 may look bad.
But then, for the duration of the second half of 2020 our VAT was reduced by 3% (covid action). In November, when I heard of 5% month over year inflation rate, it was clear that this included a VAT shift.
To get a better (rose-colored glasses) view on 2021, the recent rolling 3-year averages (CAGR) of inflation rates are 1.6% for 2019, 1.2% for 2020, and 1.7% for 2021. All three are well within the range of the 3-year CAGRs of the last two decades, nothing special.
When I use 3% for upcoming 5 years, the capital inflation correction would add up to 22%.
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[1] destatis.de, Wiesbaden
For my annual review I take inflation rates to track the buying power of my capital basis ( = money sent to the broker).
Yesterday, our federal institute of statistics [1] published an inflation rate of 3.1% for 2021.
Since I started DGI in 2015, the capital inflation correction now adds 4.9% to the capital basis.
For 2020 inflation was 0.5%. Thus, the 3.1% of 2021 may look bad.
But then, for the duration of the second half of 2020 our VAT was reduced by 3% (covid action). In November, when I heard of 5% month over year inflation rate, it was clear that this included a VAT shift.
To get a better (rose-colored glasses) view on 2021, the recent rolling 3-year averages (CAGR) of inflation rates are 1.6% for 2019, 1.2% for 2020, and 1.7% for 2021. All three are well within the range of the 3-year CAGRs of the last two decades, nothing special.
When I use 3% for upcoming 5 years, the capital inflation correction would add up to 22%.
- - -
[1] destatis.de, Wiesbaden