There is always inflation concerns tossed around by doomsayers every year. What they never tell you is inflation risk isn’t about the existence of inflation. The worry should be about excessive inflation or hyperinflation and the opposite, deflation. A healthy amount of inflation is a good thing. That said, there are ways to protect your money when inflation risk rises.
What Is Inflation Risk?
Inflation risk can be felt on the consumer side, with the loss of purchasing power. This falls under the time value of money and the concept that a dollar today is worth more than a dollar tomorrow.
We also see the same risk with our investments. Inflation causes the value of money to decrease over time whether it’s invested or not. The inflation risk exists when we have money sitting in cash or other assets not linked to inflation. In the process, the cash value decreases due to inflation or more likely, excessive inflation. Continue Reading…
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