Inflation is the biggest perceived threat to investors right now. At our recent Future of Private Investing event our panel of experts gave their views on how inflation is affecting the markets and what investors can do about it.

The panel, moderated by deputy companies editor Julian Hofmann, featured Joachim Klement, head of strategy at Liberum Capital, Eliose Greeff, the first female Elite Pro Popular Investor on platform eToro and Simon Gergel, Portfolio Manager/CIO UK Equities at the Merchants Trust/Allianz Investors….(read more)

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As the economy continues to face challenges, the future of private investing remains a topic of great concern for many investors. One significant factor that could heavily impact your investments is inflation.

Inflation refers to the general increase in prices of goods and services in an economy over time. It is usually accompanied by a decrease in the purchasing power of money, meaning that the same amount of money can buy fewer goods or services than before.

When inflation rises, the value of your investments may decrease, and the real return on your investments may be lower. For example, if you have invested money in a fixed income investment such as a bond that pays a 2% return, but inflation is at 3%, your real return will be negative 1%, meaning you will lose purchasing power.

This is why it is important for private investors to consider inflation when making investment decisions. To combat the effects of inflation, investors can diversify their portfolios by investing in various assets classes such as stocks, bonds, commodities, and real estate. They may also consider investing in assets that tend to perform well during inflationary periods, such as gold and other precious metals.

Another strategy is to invest in equities, specifically companies that tend to perform well during inflationary periods, such as companies in the energy and commodities sectors. Additionally, investors could look at investing in companies that are positioned to benefit from accelerating inflation, such as those in the healthcare and defense sectors.

Investors may also consider investing in actively managed funds that have the flexibility to adjust their investment portfolios in response to market conditions. These funds can take advantage of potential opportunities and minimize risks in inflationary environments.

In conclusion, inflation can have a significant impact on your private investments, and it is essential to consider this risk when making investment decisions. By diversifying your portfolio, investing in inflation-resistant assets, and utilizing actively managed funds, you can better prepare your investments for the potential effects of inflation. It is always wise to consult with a financial advisor to help navigate your investment strategy and ensure a responsible, informed approach.