Understanding Investing Even Modest Inflation Can Erode Purchasing Power Inflation-hedging strategies can be critical in protecting purchasing power.
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.