indexation

Vocabulary Word

Definition

'Indexation' is adjusting monetary amounts (like salaries or taxes) by the rate of inflation, which makes things fair when cost of things changes.

Examples in Different Contexts

In financial technology, 'indexation' mechanisms are implemented to create adaptive financial tools. A fintech developer might state, 'Our platform employs advanced indexation techniques to adjust investment values, ensuring optimal performance in varying economic conditions.'

Practice Scenarios

Business

Scenario:

When engaging in long-term financial planning, we need to consider how inflation might affect our investment return.

Response:

Absolutely. The indexation of returns is crucial to guard against inflationary loss.

Pension Plans

Scenario:

Cost of living changes significantly over the years. We need to ensure our retirement plan reflects that reality.

Response:

I completely agree. An indexation option in our pension plan is necessary to cope with the rising cost of living.