Introduction to Effects of Inflation on Investments

We all have heard stories from our parents about how a can of pop cost only a nickel when they were kids and how it cost only fifty cents to get into the movies. Were things actually cheaper in those days? Not really. The fact is that prices have gone up a great deal over time due to a phenomenon called inflation.

Inflation can be a serious problem for both bond and stock investors alike. Fortunately, in the United States we were blessed with low inflation at many points in the past. But that doesn’t mean inflation has gone away, and the potential for rising inflation is always a possibility.