Inflation
The most common measure of inflation is the Consumer Price Index (CPI), which is computed each month by the U.S. Bureau of Labor Statistics. The index tracks the percentage change in prices of a basket of 80,000 goods and services and is measured against the reference period 1982-1984.
When the economy is healthy and consumers are able to enjoy a rising standard of living, their demand for products grows, which raises the cost of goods and services.
Inflationary times signal a growing economy and shrinking unemployment. However, when inflation gets to be too high, it can cause a recession or, in extreme cases, a depression.
Investing can help you counteract the negative effects of inflation if your rate of return is greater than the inflation rate. Yet, though you may be able to help offset the effects of inflation, your return will still be in some way affected by it.
The time value of money is an economic concept based on the principles of both investing and inflation. In practical terms, it means that a dollar given to you today is worth more than a dollar you receive one year from now.
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Investors should consider the investment objectives, risks, and charges and expenses of a mutual fund carefully before investing. A mutual fund's prospectus contains this and other information about the mutual fund. Prospectuses are available through our trading site or through a Scottrade branch office. The prospectus should be read carefully before investing. No transaction fee (NTF) funds are subject to the terms and conditions of the NTF funds program. Scottrade is compensated by the funds participating in the NTF program through recordkeeping, shareholder, or SEC 12b-1 fees.
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Margin trading involves interest charges and risks, including the potential to lose more than deposited, or the need to deposit additional collateral in a falling market. Margin Disclosure Statement (PDF) is available for download, or it is available at one of our branch offices. It contains information on our lending policies, interest charges, and the risks associated with margin accounts.
Options involve risk and are not suitable for all investors. Detailed information on our policies and the risks associated with options can be found in the Scottrade Options Application and Agreement, Brokerage Account Agreement, and by downloading the Characteristics and Risks of Standardized Options and Supplements (PDF) from The Options Clearing Corporation, or by requesting a copy from your local branch office. Supporting documentation for any claims will be supplied upon request.
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