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All the Hacks with Chris Hutchins cover image

25 Money Rules (and When to Break Them) with Brian Feroldi

All the Hacks with Chris Hutchins

NOTE

Calculate Wisely: Adjust for Inflation to Maximize Purchasing Power

Understanding the impact of inflation on interest rates is crucial for evaluating purchasing power. By subtracting inflation from interest rates and applying the rule of 72, one can estimate the time required to double purchasing power, which holds more significance than merely increasing the value of investments. An essential formula for portfolio management is the 110 rule, which advises individuals to subtract their age from 110 to determine the appropriate percentage of investments in stocks or equities, with the remainder allocated to bonds or cash. This strategy aids in optimizing investment allocation based on age-related risk tolerance.

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