HOW INFLATION AFFECTS INVESTMENT STRATEGIES
Keywords:
Key words: Inflation, Investment, Stagflation, Hyper inflation, bonds, financial markets, shares, purchasing power, interest rates, monetary policy.Abstract
Abstract: Inflation plays a critical role in shaping investment strategies, influencing both individual and institutional decision-making. This article examines the multifaceted effects of inflation on asset classes such as equities, bonds, real estate, and commodities. By exploring historical data and recent trends from periods of high inflation such as the 1970s and the post-pandemic era this study highlights how investors adjust their portfolios to preserve value and maintain returns. The analysis includes a review of inflation-hedging assets, the role of central bank policies, and behavioral responses in financial markets. The article also offers insights into contemporary strategies, such as sector rotation, investing in inflation-linked securities, and diversification in global markets. Ultimately, the paper provides the most essential terms and practical guidance for adapting investment approaches in an inflationary environment, emphasizing the importance of flexibility, risk management, and long-term planning.
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