What is the impact of inflation on investment?
Inflation has both negative and positive effects on investment, including the decline in the actual purchasing power of funds, the decline in bond interest income, the appreciation of physical assets, and the rise in some stock prices. Inflation leads to rising prices, and investors need to pay higher prices when buying goods and services, thus reducing the actual purchasing power of funds. Inflation leads to the decline of purchasing power in the future, which has a negative impact on fixed-rate bonds. Because the interest income of these bonds may be eroded in the future purchasing power, which will adversely affect the return of investors. Secondly, in the period of inflation, real estate, gold and other physical assets usually appreciate, which can help investors realize wealth appreciation. In addition, some companies may adjust product prices during inflation to improve profitability. This may have a positive impact on its share price, thus bringing returns to investors.
What is the strategy to maintain and increase inflation?
Investors need to choose appropriate investment strategies to hedge the impact of inflation, such as stock investment, commodity investment, fund investment and so on. These are the choices to maintain and increase the value of inflation. During the period of inflation, the stock market is usually more stable than other markets. Stock investors can choose to invest in some stable large companies, which usually have stable cash flow and high dividend yield. In addition, some infrastructure companies can also be used as investment options for inflation protection. During inflation, commodity prices usually go up. Investors can consider trading some commodities, such as gold, silver and pig futures, to hedge the impact of inflation. In addition, investors can also buy some fund products that focus on commodity futures investment. Real estate is also an investment choice for inflation. Investors can choose to invest in some sound real estate companies or buy some real estate industry funds.