05-30-2015, 03:04 PM
(05-30-2015, 09:40 AM)Dividend Watcher Wrote: Ken, that is probably the wiser choice to use as an inflation rate benchmark.
I use a flat 4% long-term rate as my everyday benchmark. If I can keep the whole portfolio's income growth rate above that, I am happy.
I agree with Dividend Watcher and use 4%.
My understanding is that the Fed uses an inflation rate that does not include food and energy. Economists exclude these because they are "volatile." They don't seem volatile to me, they only seem to go up.
I would use the CPI which includes food and gas and which averaged 3%-4% over the last century.
Just as most people are conservative when evaluating a company's value, I find it better to be aggressive when dealing with inflation (ie more margin of safety).