How inflation affects investment
Every individual who is earning wants to save money, but inflation affects purchasing power and savings; if we spend less, we save more, but the high price of goods and services affects everybody’s earnings.
Cause of inflation
The primary cause of Inflation is when the demand for goods and services is greater than the available goods or services. This Inflation known as demand-pull inflation price
Will increase inflation also increase the cost of production, increase the cost of goods and services, producer of goods and services, increase the sale price. This is known as cost-pull inflation.
” Inflation is a trend of increasing prices over the year; Inflation rate ends and the loss in purchasing power over time.”
How to beat inflation and do investment
Fluctuation of inflation can be hedged by regular or steady income, it can be your salary, business income profit from bonds and stock common question is that
How to save money, make investments, invest in FDs, the stock market, or the bond market.
It’s a point of discussion about what’s better bond or stock. Some HOW investors prefer investment bonds, while others choose stocks; both are return-generating products. Investors should invest or not. It is their choice. To know this, go through this explanation
There are three types of. Conservative, moderate, Aggressive. Bond is good for a Conservative investor who wants a steady income and doesn’t want to take many risks. Bond and stock should be invested equally or with a 60:40 ratio in the portfolio. Don’t put all the eggs in one basket. If you are an aggressive investor, go with stock, but 10% of your capital should be in bonds.
In the end market, we can see an inverse relationship when stock prices go up, bond prices fall based on lower demand each time stock prices rise, and more investors capitalize on this growth.
Bonds do not give ownership, but it is a kind of loan; stock price is high risk, but a bond is also risky; if a company is bankrupt, you will lose the entire amount, including your principal amount. Bond and stock both generate income in different ways.
Bonds are a risky, low-income instrument, and stock is a risky, high-return investment. Conservative investors always prefer bonds, but aggressive investors choose stocks. In my view, stock profit reinvests in high-yield stock.