Average inflation across Europe has hit the 5% barrier, the highest recorded levels in the Eurozone. Even Global inflation is at an all time high.
The largest contributing factor to this, is the rise in energy prices by over 26%.
Although economists predict that inflation will decrease as markets stabilise after being affected by Covid, this is still an attention seeking revelation. It leads us to think earnestly about inflation and how it can eat away at our investments.
You would think that an investment growing at 5% annually is a decent return on investment, but if inflation is 5%, then you are only preventing your money from depreciating. You would need to earn more than 5% to see your money grow.
A good financial advisor will factor inflation into your retirement investment strategy:
Inflation could also be a deciding factor in your level of risk. If you are generally a conservative investor or nearing retirement, you might wish to move your investments into more stable vehicles that might produce lower returns. Avoid playing it too safe or you might end up losing money as inflation will eat your money if your returns are too conservative. You could end up several years into retirement with a shortage of funds.
Always consult with your financial advisor regarding inflation beating investments. They will tailor make your investment strategy according to your unique financial situation and risk appetite. [email protected]
Please note, the above is for education purposes only and does not constitute advice. You should always contact your deVere advisor for a personal consultation.
* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.