Purchasing Power

Purchasing power is defined in two different ways — one is economical, and the other is investment-related. In economic terms, purchasing power represents the value of goods or services that one unit of currency can buy. Purchasing power is degraded over time by inflation. $20 today buys fewer groceries than $20 five years ago. Additionally, a five year 6% bond bought today doesn’t factor in purchasing power five years from now.

In regards to investments, purchasing is the amount of investments that can be bought on margin. For example, if an investor has $10,000 in their account with a 50% margin, the investor can actually purchase $20,000 worth of investments.

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Hypothetical example(s) are for illustrative purposes only and are not intended to represent the past or future performance of any specific investment.

Investing in alternative assets involves higher risks than traditional investments and is suitable only for sophisticated investors. Alternative investments are often sold by prospectus that discloses all risks, fees, and expenses. They are not tax efficient and an investor should consult with his/her tax advisor prior to investing. Alternative investments have higher fees than traditional investments and they may also be highly leveraged and engage in speculative investment techniques, which can magnify the potential for investment loss or gain and should not be deemed a complete investment program. The value of the investment may fall as well as rise and investors may get back less than they invested.

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