Tuesday, 2 March 2010 08:25
Your retirement portfolio may have survived the last couple of years of recessionary pressures but it is prepared for what might be next? Some experts are concerned about a new portfolio concern, inflation is on the horizon. Inflation has been around forever but the concern is if hyper-inflation that occurred in the late 1970’s rears itself again, personal wealth could take a hit again.
What can you do? Talk to your advisor about diversification to guard against inflation. Diversification can be a tool for several retirement and investing concerns. Using it for inflation takes a longer view of your retirement concerns. Why is it is so important to be concerned about inflation?
An inflation rate of 2.5% will reduce your purchasing power by 22% in 10 years. An inflation rate of 5% will reduce your purchasing power by 40% in 10 years. So as you can see, inflation can devalue your retirement portfolio very quickly.