Businessman hands protecting over a stack of coins. Risk, economic recession and investment security. Photo Credit: Envato @prathanchorruangsak
Investors closely monitor inflation as it impacts the real returns on investments. In an inflationary environment, the value of cash decreases, eroding the real value of returns on investments. This has been a significant issue in economies like Japan, where prolonged periods of low inflation have led to a stagnation in investment returns. Conversely, unexpected inflation can also negatively impact bond investors as it erodes the real value of future cash flows.
