Inflation Risk Means Investors Need to Think Long Term

Welcome to

Please help us personalize your experience and select the one that best describes you.

Your personalized experience is almost ready.

Join other Individual Investors receiving FREE personalized market updates and research. Join other Institutional Investors receiving FREE personalized market updates and research. Join other Financial Advisors receiving FREE personalized market updates and research.

Thank you!

Check your email and confirm your subscription to complete your personalized experience.

Thank you for your submission

We hope you enjoy your experience


Find the latest content and information here about the 2019 Charles Schwab Impact Conference.


Receive email updates about fund flows, news, upcoming CE accredited webcasts from industry thought leaders and more.

Content focused on helping financial advisors build successful client relationships and grow their business.

Content geared towards helping financial advisors build better client portfolios.

Get insights on the industry trends and investment news from leading fund managers and experts.

Stock chart and screen


Inflation Risk Means Investors Need to Think Long Term

Jul 21, 2014

Looking at historical rates of inflation increases, one can scour the data and find 4% as the approximate number for the annual rate of increases. If you do the math over 30 years, what someone pays $1 for this year will cost you nearly $3.25 over the course of the next three decades. So it’s easy to understand that one’s nest egg that sits in cash will eventually evaporate much quicker than an individual realizes.
Investing for growth and seeking returns of 8%-10% a year may sound ambitious, but it will keep investors easily ahead of the curve. Let’s look at an example:

The Best Approach

The Fidelity Blue Chip Growth K (FBGKX) has been a stellar name for mutual fund investors to own in the Large Cap Growth category – $10K invested in the fund 10 years ago, would now be worth $25K. This is an outstanding return, but it can be done.

The concern for mutual fund investors is keeping stock exposure a bit too high as retirement years get close. When you think about people living longer, the threat of running out of money is a stark reality, especially for those who neglect to invest in their early years.

The best approach for any mutual fund investor is to dedicate a specific amount of one’s earnings into a 401K plan and a brokerage account to maintain a steady capital injection into these accounts. Avoid timing the market and understand that most stock market years tend to be positive. The tough cycles will undoubtedly come, and one can easily allocate a bit less if there is a sense of fear in keeping too much in stocks at an older age.

The Bottom Line

In the end, staying the course and investing a bit longer in stocks than one would expect will probably keep investors ahead of the curve where inflation is concerned.

Sign up for Advisor Access

Receive email updates about best performers, news, CE accredited webcasts and more.

Please Enter Your Email
Please Select Your Advisor Type

Popular Articles

Download Our Free Report

Why 30 trillion is invested in mutual funds book