Stocks Beat Inflation

Among the various asset classes available, the stock market is the only choice that an investor could make to outpace inflation. The financial advisors have proved that over a long run, its only stocks that could help an investor create wealth over and above other instruments. It is believed that debt instruments like bonds and fixed deposits return less rate of interest and do not keep pace with inflation.
For example, a fixed deposit returns 8% of interest on investment, while a stock could fetch 15% of return annually, given the rate of inflation is 10%. Inflation diminishes the purchasing power of money and therefore, investments in asset classes that lag behind the rate of inflation amount to erosion of wealth. For long term goals such as retirement, a child’s education, financial advisors suggest to invest in equities as they are inappropriate for short durations due to high levels of risk.

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