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.

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Fixed-income investments, such as bonds and certificates of deposit (CDs) are particularly vulnerable to inflation.

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While inflation can be negative to fixed-income investments, certain types of equity investments might serve as a potential inflation buffer

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Holding a significant amount of cash on hand or in low-interest savings accounts might be detrimental during inflationary situations

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Diversification is an important risk management approach for limiting the impact of inflation on assets.

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Inflation-indexed assets, such as Treasury Inflation-Protected Securities (TIPS), are available to investors concerned about inflation.

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Rebalancing a portfolio on a regular basis can help reduce the impact of inflation.

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Financial advisors can provide advice specific to individual circumstances and assist in developing plans to efficiently handle inflationary situations

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Click here to Understanding the Impact of Inflation on Investments

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