Help me understand Today's Currency vs Actual Currency.
If you’ve read the tooltips and more-info popups in the app and are still having trouble, here’s another way to think about it that might help:
A constant expense in Today’s Currency corresponds to a larger value in Actual Currency every year (assuming positive inflation).
So, if inflation is 3% and you have a house appreciating at 4% per year, then you would only see a ~1% change in value per year in Today’s Currency; but a 4% change in Actual Currency.
Note that the 1% above is actually just an approximation; for more info, you can review the real rate of return formula.
Most people like to make long-term plans using Today’s Currency because it’s easier to think in terms of how much items cost today. In Actual Currency you might technically be a millionaire in 40 years, but that’s less exciting than it seems because that $1M in Actual Currency is probably going to have much less purchasing power than it does today.
