Saturday, July 16, 2011

What is the best investment/way to protect money from inflation years down the line?

All investments have a risk of actually being worth less in the future. However, a well diversified and allocated portfolio offers the best chance of growing faster than inflation while reducing market risk. Specifically, investing in equities (stocks) means you buy part of a corporation which is expected to keep operating at a profit and possibly even increase dividends (if dividends are offered). Bonds help stabilize your portfolio and is expected to be quite safe. I included a link to a really neat calculator on Vanguard's website. You can play around with how much risk you are willing to take and other variables to see what's the chance of your nest egg lasting a certain amount of time.

No comments:

Post a Comment