For some people, the goal of investing is not so much getting ahead as it is not falling behind. Because inflation marches forward each and every year, the fear is that your buying power will diminish if your investments don’t appreciate as quickly as the cost of what you buy.
Theoretically, there’s a risk of deflation too, but economists tend to agree that it’s not likely. There’s also a fear among some that the U.S. dollar could simply become worthless someday, whether because of hyperinflation or some other reason.
Most savings can be eaten up by inflation. Bonds and bank deposits are particularly vulnerable. Because companies can raise prices, maintain profits and adapt to market conditions, the stock market has kept up with inflation and, in fact, has beaten it over long periods. But inflation is no friend to stocks; severe inflation damages the economy and thus companies too but…
Most savings can be eaten up by inflation. Bonds and bank deposits are particularly vulnerable. Because companies can raise prices, maintain profits and adapt to market conditions, the stock market has kept up with inflation and, in fact, has beaten it over long periods. But inflation is no friend to stocks; severe inflation damages the economy and thus companies too but…
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Bullions And Coins 