With the potential for increased inflationary pressure worldwide, now may be an especially compelling time to consider inflation-hedging investment strategies.
What this chart shows
Inflation does not need to be high to eat into investment returns. A 3% rate of inflation substantially reduces the purchasing power of $100 over four decades. After just a decade, that income will cover 25% less of goods and services.
What it means for investors
Even at today’s low levels, inflation can exact a heavy cost on the value of your portfolio over time. Maintaining a constant inflation-hedging strategy can help investors preserve purchasing power, while also cushioning against sudden spikes in inflation.