Question of the Week

Which of the following would endure the most negative impact based on rising inflation:

a) 'AAA' Bonds
b) Blue Chip Stocks
c) Real Estate
d) Gold

Answer:

The correct answer is a).

Bonds show a far greater degree of vulnerability during inflationary times than do the other choices, which, historically, have fared well when the cost of goods and services has increased. Bondholders incur rising interest rates, which drive down the value of their investments. Furthermore, the interest paid on bonds also loses purchasing power during times of inflation.