The Battle Against Inflation Investments can provide a way to keep up with or stay ahead of inflation. While inflation rates have fallen sharply from the peak levels of 1979-80, the dollar is still shrinking in value. A dollar squirreled away in a safe-deposit box in 1980 had only about 60 cents of buying power in 1993. Although every investment carries some risk, it may be even more hazardous not to invest. An investment's so-called real rate of return is measured in terms of purchasing power, which is the nominal rate of profit growth adjusted downward for inflation.
Corporate bonds are long-term, with interest reinvested.
U.S. Treasury bills are three-month U.S. government debt, with interest reinvested. Inflation represents the Consumer Price Index. Standard deviation measures the risk, or volatilty of rates of return. Ibbotson Associates Return to TOP . The Power of Compounding Getting started with investing as early as possible can make a big difference in how much wealth is ultimately accumulated.