The material interest indicates the material value movement of a fortune article. Apart from the nominal interest charges expressed in currency also the value movement of the currency is considered by inflation (or deflation).

By a nominal interest n (in per cent) experience a fortune article, for example savings balances by credited interest of the bank or a real estate by market price development, in a certain regarded period a nominal increase in value with the factor 1+ \ frac {n} {100}.

With an inflation rate i (in per cent) the inflation gnaws however at the same time at the value of the currency and tosses the value of the fortune article with the factor \ frac {1}}

The material interest r (in per cent) in the regarded period amounts to therefore

r= (\ frac}} - 1) *100

If n=i the material interest is therefore 0%.

For n>i a positive material interest results, i.e., despite inflation effect a material increase in value of the fortune article results.

With n<i a nominal increase in value stands on the paper, material the value of the fortune article was however reduced.

According to the interest situation of the owner of fortune the material value development can be individually different in addition. Because the inflation rate i is determined due to an investigation of the price history by many products. If now a certain entrepreneur with its investment of funds or by the sale of a real estate liked to finance a certain individual product or a certain being and service mixture, their price history was more favorable than the general inflation rate, then the actual value of the fortune regarded by it increased still more than in the formula specified above. Also the against set case is possible: that the prices straight for the individually planned investments increased more strongly than the generally determined price average.

That applies also to net assets, which are meant for the private consumption. Because the individual desires will often deviate more or less strongly from the product and service pallet, for which the general price history admits determined and in form of the inflation rate was given.

If one liked to know exactly, how the value of the own fortune develops regarding the personal need structure material, it can be meaningful, by guidance of a household book or by price observation of the products, which one wishes to purchase to determine an individual inflation rate. It may not be ignored however that sometimes with the price also the quality of products changes.

Articles in category "Material interest"

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