8 effective steps to understanding the Impact of Inflation on Investments
One of the most important impacts of inflation is the ability of money to lose its purchasing power.
Fixed-income investments, such as bonds and certificates of deposit (CDs) are particularly vulnerable to inflation.
While inflation can be negative to fixed-income investments, certain types of equity investments might serve as a potential inflation buffer
Holding a significant amount of cash on hand or in low-interest savings accounts might be detrimental during inflationary situations
Diversification is an important risk management approach for limiting the impact of inflation on assets.
Inflation-indexed assets, such as Treasury Inflation-Protected Securities (TIPS), are available to investors concerned about inflation.
Rebalancing a portfolio on a regular basis can help reduce the impact of inflation.
Financial advisors can provide advice specific to individual circumstances and assist in developing plans to efficiently handle inflationary situations
Click here to Understanding the Impact of Inflation on Investments