Inflation risk

Inflation risk
The risk that our money will not be worth as much in the future. That's because the cost of the things we need to buy, such as like housing, clothing and medical care all increase.

Inflation risk
Definition:
Also called Purchasing power risk, the Risk that changes in the Real return the Investor will realize after adjusting for Inflation will be negative. ...

6 Stocks to Hedge Your Inflation Risk
One shouldn't overstate the problem: Given the spare capacity in the economy, inflation is unlikely to be an immediate risk.

Inflation risk
The inflation risk (or risk of inflation) is that the value of assets or income may decrease as inflation reduces the purchasing power of a particular currency.

Inflation Risk
This is the risk associated with an increasing rate of inflation. Let's suppose you buy a GIC offering 11% paid annually over five years.

Inflation Risk
The money you earn today is always worth more than the same amount of money at a future date. This is because goods and services usually cost more in the future, due to inflation.

Inflation Risk
The risk that the yield of an investment will be diminished by rising inflation rates.

Inflation risk Inflation causes tomorrow's dollar to be worth less than today's; in other words, it reduces the purchasing power of a bond investor's future interest payments and principal, collectively known as "cash flows.

Inflation risk: The risk that increasing inflation will diminish or eliminate returns from an investment.
Initial Public Offering (IPO): The first time a company offers stock to the public.

Inflation Risk - If the rate of inflation is higher than the rate of return on investments, money invested today will be worth less several years from now.
International Equities - Stocks of companies domiciled outside the United States.

Inflation risk - The uncertainty of the future real (after-inflation and -tax) value of an investment.

inflation hedge An investment designed to protect against inflation risk. Such an investment's... inflation rate The rate at which prices for goods and services rise, and, subsequently, purchasing...

Usually, the longer the term of a bond, the higher the interest rate that's paid to the holder, compensating for the inflation risk of having money tied up for a long time.

Risk-free assets are prone to inflation risk. The return of security is confidence in advance and with certainty. The assurance comes from the confidence of the issuer of the asset.

Regardless of the debate over the true statistical probability of default on risk-free assets, it's important to note that risk-free assets also face inflation risk, whereby the earnings are eaten away at by inflation over time.

Bonds - Article
Bonds - Articles
Risks of Bonds: Inflation Risk, Liquidity Risk, Reinvestment Risk
The Flight to Safety - Not So Safe - Moving Into and Out of Bonds Can...
Bonds Fit in Every Portfolio - Investing ...

Inflation-indexed bonds are bonds whose principal and coupon are indexed to inflation, cutting out inflation risk. Best known in the USA are TIPS (treasury inflation-protected securities) issued by the U.S. Treasury.
RELATED TERMS ...

Inflation risk: The risk that returns (on money deposited in a CD account, for example) will not keep pace with inflation Interest-rate risk: The risk that returns will not keep pace with rising interest rates.

- Elusive pricing: Individual bonds do not trade like stocks so it can be difficult to find a specific issue's current market value. Besides inflation risk, bond pricing depends on time to maturity, ...

Money market funds pay dividends that generally reflect short-term interest rates, and historically the returns for money market funds have been lower than for either bond or stock funds. That's why "inflation risk" - the risk that inflation will ...

Bonds can also be subject to other risk factors such as call and prepayment risk, reinvestment risk, event risk, liquidity risk, credit risk, inflation risk, yield curve risk, volatility risk and sovereign risk.

Purchasing power risk
Related: Inflation risk
Pure discount bond
A bond that will make only one payment of principal and interest. Also called a zero-coupon bond or a single-payment bond.

protection against inflation, TIPS can also be a useful information source for policy makers: the interest-rate differential between TIPS and conventional US Treasury bonds is what borrowers are willing to give up in order to avoid inflation risk.

This is a perceived notion and may not always hold good. In fact, bonds carries risks in the form of credit risk, interest rate risk, prepayment risks, inflation risks, etc. Companies may go bankrupt or default on their debts for extended periods.

The downside of capital preservation over the long term is that by avoiding the potential risks of more aggressive investing, you exposure yourself to greater inflation risk.

Purchasing-power riskRelated: Inflation risk Pure expectations theoryA theory that asserts that the forward rates exclusively represent the expected future rates.

represents market fluctuation (The Standard & Poor's 500 index measures the overall change in the value of 500 stocks of the largest firms in the US.) industry rank: Value Line's ranking of a company within its own industry inflation risk: ...

See also: Risk, Inflation, Investment, Market, Bonds