In 1980 a first class postage stamp such as the one shown at right was only 17 cents.  Retirement for a typical couple lasts 30 years.

In 2010 you paid 57 cents plus GST!  The cost of an everyday item rose by over 300% in 30 years, clearly illustrating how inflation, the rising cost of living, has eroded the value of money.

Message: if your investment return does not exceed inflation by a wide margin, then although you may have more dollars those dollars will buy less for you.

In order to determine the true return on your investment you must calculate the combined effects of income tax and inflation.  This tells you what is left after the taxman and the rising cost of living have done their damage to your money.

Click here to use the Bank of Canada's inflation calculator and compare the cost of a basket of goods from now to a past year, all the way back to 1914.

Does it make sense to invest for a fixed income in a rising cost world?  I certainly can't believe so.  The fixed income retirement investor is about as reckless as anyone could be.

An excellent financial planner always focuses on the after tax and inflation return and explains why this is important to your personal financial plan.