There is no official and accurate data on the annual inflation rate, but from an official point of view, the inflation rate can generally be expressed by CPI, that is, the consumption index. Our country's CPI is basically maintained at around 3%, but CPI reflects the price level represented by food, and the actual inflation rate is higher than this level. Judging from the current situation, China's actual inflation rate is around 6%, that is, your annual investment.
We often hear that fixed investment index funds are very suitable for ordinary people to outperform inflation. Can fixed investment index funds really outperform inflation?
Judging from the rate of return, the long-term average annualized rate of return of index funds is around 10%, which means that this rate of return can completely outperform inflation, but this rate of return has preconditions.
The first is the investment time. The market is volatile and cyclical. The rate of return of index funds we are talking about is a long-term result. If it is in a bear market year, the return of fixed investment index funds is likely to be negative, let alone outperform inflation. To achieve the effect of outperforming inflation, it is very important to insist on long-term fixed investment.
There are also investment varieties, even index funds, there are different varieties, such as broad-based index funds that track the Shanghai and Shenzhen 300 Index and the Growth Enterprise Market Index, as well as industry theme funds in different industries. Generally speaking, broad-based index funds are more stable, and industry-themed funds are closer to equity funds with strong volatility. Its yield performance naturally fluctuates.
If you are considering a long-term fixed investment, you can choose a variety with greater volatility. Of course, if you can't bear greater fluctuations, broad-based index funds can also.
Generally speaking, long-term fixed investment in index funds can achieve a good effect of outperforming inflation.