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INFLATION

Rise in the prices of goods and services, as happens when spending increases relative to the supply of goods on the market – in other words, too much money chasing too few goods. Moderate inflation is a common result of economic growth. Hyperinflation, with prices rising at 100% a year or more, causes people to lose confidence in the currency and put their assets in hard assets like real estate or gold, which usually retain their value in inflationary times.

INVESTMENT

Use of capital to create more money, either through income-producing vehicles or through more risk-oriented ventures designed to result in capital gains. Investment can refer to a financial investment (where an investor puts money into a vehicle) or to an investment of effort and time on the part of an individual who wants to reap profits from the success of his labor. Investment connotes the idea that safety of principal is important. Speculation, on the other hand, is far riskier.