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The 2021 Break Even Index




By quantifying the effects of taxes and inflation, the Break-Even Index gives an idea of what must be earned in a taxable account in order to maintain dollar purchasing power of investments and savings. In other words, money loses value through the loss of purchasing power over time. Interest-based accounts, like CD's, actually lose value over time when compared with effects of taxes inflation. To maintain value over time, money must be actively invested to beat the the loss of value that interest-based accounts provide.

HOW TO USE THE INDEX. Compare the break-even rate with the interest earned in your taxable accounts. If you earned more than the break-even rate, you gained purchasing power in your investments/savings and did well. If you earned less than the break-even rate, you lost purchasing power to taxes and inflation. The loss of purchasing power will be detrimental to investment/retirement goals over mid to long-term periods, and should be remedied.








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