What will inflation lead to?
The most intuitive manifestation of inflation is the rise in commodity prices. Inflation will shrink people's assets, reduce their purchasing power, reduce their income and face unemployment. Inflation means that the money supply is greater than the actual money demand, and the purchasing power of money will decrease, so that prices will rise continuously and generally for a period of time.
Inflation is a problem that all investors have to face. Investors who want to preserve and increase their value under inflation can consider the following aspects:
1, invest in floating-rate bills and deposits. Buying bonds or deposits is a relatively conservative investment strategy, but it is also a way to resist inflation. During the period of inflation, the interest rates of newly issued bonds and deposits usually rise, and investors can judge or invest in floating interest rate products according to the actual interest rate. Especially in the period when the stock market fluctuates greatly, the returns of bonds and deposits are often more stable, which is a suitable investment method for maintaining and increasing the value steadily.
2. Trading in bulk commodities or purchasing physical assets. In commodity trading, such as futures and options investment, investors can do more commodity futures in the futures market in order to obtain the benefits brought by inflation. If investors have low risk tolerance, they can also consider buying physical assets such as precious metals such as gold and silver. Their prices are usually relatively stable and will appreciate when inflation occurs, which is an effective way to resist inflation.
3. Invest in high-quality growth stocks or stocks of companies that are expected to benefit from inflation. High-quality growth stocks usually have strong profitability and growth, and their performance growth can resist the impact of inflation and realize asset appreciation. Investors can choose to buy blue-chip stocks or equity funds, but they should be careful not to invest too much in a certain industry or individual stocks to reduce the overall investment risk. In addition, companies that benefit from inflation are also investment targets that investors can consider. In the period of inflation, the profit rate of some companies may increase, such as consumer goods production industry, retail industry and so on. And the performance of these companies may perform better in an inflationary environment.
4. Diversified investment portfolio is also one of the important ways to resist inflation. Investors should allocate their assets to a variety of different types of investments to spread risks and maximize returns. For example, investors can invest in stocks, bonds, real estate, physical gold and other fields at the same time, so as to realize diversification of investment portfolio and dispersion of risks. Diversified investment portfolio can not only resist inflation, but also enhance the ability of investment to resist market fluctuations.
The harm of inflation is still great. In the economy, the amount of money keeps increasing, but the amount of goods does not increase, which leads to the rise of commodity prices.