John Bogle: How to Protect Your Investment Portfolio from Inflation

credit: Finance Jane

In economics, inflation refers to a general progressive increase in the prices of goods and services in an economy.

When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduction in the purchasing power of money.

Because consumers can purchase fewer goods, revenues and profits decline, and the economy slows for a time until a measure of economic equilibrium is reached.

Inflation hurts consumers, but it can be good if investors pick the right stocks.

By identifying companies that can take advantage of inflationary conditions, investors can potentially benefit from elevated prices and maintain the purchasing power of your investment portfolio.

In this video, John Bogle talked about how investors could protect their portfolios from inflation. He suggested people focus on the real value of their investment, rather than the market prices.

He suggested that dividend payments have a high correlation with inflation, and people should pay attention to that.

John Clifton “Jack” Bogle  was an American investor, business magnate, and philanthropist. He was the founder and chief executive of The Vanguard Group, and is credited with creating the first index fund.

Source: Finance Jane