Forgotten By Some, Inflation Is Far From Gone
In an article for InvestmentNews, Rusty Vanneman reminds investors to be mindful of inflation. The reason being is that, although inflation has been a non-issue for the last several years, there are some signs that inflation may be starting to return. The Core Consumer Price Index (Core CPI) is nearing 2% year-over-year growth, ignoring food and energy prices. Rising home prices and wage growth are further indications of coming inflation.
Vanneman points out that successful investors must generate long-term returns that outpace inflation. He also offers examples of investment vehicles that, typically, perform better during inflationary periods. They include:
- Mutual funds or ETFs that focus on “real assets,” such as commodities, natural resources stocks and real estate.
- Emerging market stocks
- Short maturity, high yield or inflation-linked bonds
For more information of those areas that, historically, have done better during inflationary periods, here are some articles from the AAII archives:
- Frontier Markets Offer Growth From a Very Diverse Set of Economies
- TIPS and the Nature of Inflation Protection
- How to Make Money From Bonds
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