You’ve probably heard the news about rising inflation, but before you go and sell your stocks, let’s paint the whole picture.
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Let’s Talk Inflation (And How It Will Impact Your Portfolio)
Inflation is a term that we often hear in the news, but what does it really mean and how can it impact our portfolios? In simple terms, inflation refers to the general increase in prices of goods and services over time. When inflation occurs, the purchasing power of money decreases, which means that the same amount of money can buy you fewer goods and services.
So, how does inflation impact your portfolio? Here are a few key points to consider:
1. Impact on Cash and Fixed-Income Investments: Inflation can erode the value of your cash and fixed-income investments. If the return on these investments does not keep up with the rate of inflation, you may end up losing purchasing power over time.
2. Effect on Stocks and Real Assets: Inflation can have a mixed impact on stocks and real assets. On one hand, companies may be able to raise their prices to keep up with inflation, leading to higher revenues and potentially higher stock prices. On the other hand, inflation could also lead to higher interest rates, which may negatively impact the valuation of stocks and real assets.
3. Diversification: Inflation underscores the importance of diversification in your portfolio. By holding a mix of asset classes such as stocks, bonds, and real assets, you can potentially mitigate the impact of inflation on your portfolio.
4. Long-Term Perspective: While inflation can be concerning, it’s important to take a long-term perspective when it comes to investing. Historically, stocks and real assets have been able to outpace inflation over the long term, making them valuable components of a portfolio.
So, what can you do to protect your portfolio from the impact of inflation? Here are a few strategies to consider:
– Consider investing in assets that have historically been able to outpace inflation, such as stocks and real assets.
– Diversify your portfolio to include a mix of asset classes that can potentially mitigate the impact of inflation.
– Consider inflation-protected securities, which are specifically designed to provide a hedge against inflation.
In conclusion, it’s important to understand the impact of inflation on your portfolio and take steps to mitigate its effects. By staying informed and making strategic investment decisions, you can potentially protect the purchasing power of your investments in the face of inflation.
Hey I know this is 2 years later so you probably won't read this comment but I would love it if you could make a similar video on volatility and maybe explain some models (if there are any) on how you can hedge volatility
I guess Deutsche bank was right with their “out of consensus” call. Thanks Biden administration for dumping trillions more on already way too hot economy, genius move.
Bonds. Are. Back. Whatever your tactical allocation, there’s no better time to deploy a fixed income strategy than when rates are as high and the equity market is as low (and going lower) as today. Stick to your guns with your strategic allocation, though, and of course go talk to your advisor.
Wasn't the 70s the start of the degrading of unions and workers rights in the US?
your hair in under inflation?
Thank you for an excellent explanation
on inflation and how investors respond
to the challenges it presents.
Please make an update about how inflation has moved since the making of this video. Currently sitting at stagnant inflation in CPI since June 2022, and PPI has declined in the same period. Give your take PLEASE.
9:50 on point
The relation is between money supply and stock valuation. High inflation ( because of money printing + sometimes supply side) response is higher interest rates. When they go up they suck cash out of the system which translates into lower demand for everything. Stocks react preemptively with lower valuation of future revenue inflation adjusted. That’s why real rate of growth tend to be negative like in 1970s 8:53
bro our infation rate in 2022 was 85 precent
Hmm thanks
We're havin 6 or 7 each month rn in my country, almost hit 100% a year
Isn't there a limit to profitability for a company?
From what I've seen, if the viewer still went on to pull all their money out of stocks, they would have missed out on some serious gains over the following months. …Followed, admittedly, by a pretty steep loss. Never can tell.
The intro of the video is feeling a bit more relatable today. Hopefully inflation slows if the consumer recedes.
Your hair color is very cute.
Great video. Thanks!
I have a question how fundamental effect share market price. Do share fall to 0 percentages?
I'm curious what your real return would have been if you'd just stayed in cash. Would your buying power have decreased more than the 2% it did for people invested in stocks?
How about now? Should I unload stonks and buy that island?
Here’s a solution to everything you just said, Bitcoin
guys i'm from turkey you know nothing about inflation :D. have you guys ever seen something double in price in a matter of week.
Money should be finite, that's the only solution to inflation
Excellent video! This has given me a better understanding of inflation that anything I've read before. Thank you for taking the time to make these videos! Very educational!
TSMC and other chip manufacturing delays was a big hit. Nice to see more videos about inflaiton