Inflation is a risk that all investors must have in their sights and it is not an easy one to mitigate in the short-term.
Even periods when inflation has been relatively low, it has silently whittled away spending power. On average over the past 20 years, inflation has been around 2.8% per annum, which does not sound too bad. It is. Over 40% of one’s spending power has disappeared.
On the other hand, global equities have managed to provide positive real returns for investors over the past 20 years, which includes the equity market turmoil in 2007-2009 during the global financial crisis, and 2022.
Over the longer-term, equity assets can help to deliver inflation-plus returns to protect and grow wealth.
Owners of equities, however, require staying power as these positive inflation-beating returns do not come in straight lines – the longer an investor is able to hold their equity investments for, the greater the chance that they will receive positive, after-inflation returns.
At Wells Gibson, we believe your wealth represents your past and your future so don’t allow inflation to erode it!
Past performance is not a guide to future returns.
