Inflation refers to the fact that the money supply exceeds the actual demand for money, and the purchasing power of money declines, which makes prices rise continuously and generally for a period of time. Inflation will shrink people's assets, reduce their purchasing power, reduce their income and face unemployment.
Extended data:
What is inflation?
Inflation refers to the phenomenon that the price rises continuously and generally for a period of time because the money supply exceeds the actual demand of money and the currency depreciates.
In fact, the simple understanding of this phenomenon is that things are expensive and money becomes worthless.
For example, Venezuela, how serious is inflation in this country? Almost everyone is a millionaire, but his salary can only afford one kilogram of meat. The serious devaluation of the currency makes people prefer to barter.
Large denomination Venezuelan currency
Maybe someone will say, don't you just print less money?
However, the formation of inflation in Venezuela is the result of multiple factors, such as currency overshoot, policy factors and international commodity prices.
What effect does inflation have on us?
The above example is about hyperinflation. Not all inflation is hyperinflation. Inflation is also divided into hyperinflation and low inflation. In fact, moderate inflation can stimulate economic growth.
Mild inflation and rising product prices will stimulate manufacturers' production and gradually change people's consumption patterns. Because prices are always rising, people will have the impulse to consume or produce, which will be beneficial to economic development.
Can buying funds outperform inflation? How to configure it better?
The concept of inflation has many different meanings. If we look at the official consumer price index CPI, it is actually not very high. It is the price increase of such consumer goods in our daily life. In fact, our bond funds and stock funds can outperform the index very well.
However, if inflation is a real consumption growth rate and all housing, medical care and education are taken into account, the capital depreciation rate in China is still very fast.
We need to look at the data of M2, which may be 10%~ 12% in previous years, so it is difficult for you to beat this figure.
You have to choose some good stock funds and hold them for a long time, and you can't buy them at a high point. In this way, you have a better hope of beating inflation.