How to Protect Retirement Assets From Inflation
Begin financial planning early to protect your retirement assets from inflation. Planning ahead gives your hard-earned money time to grow and offset the negative effect of inflation on your retirement accounts.
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Instructions
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Diversify your portfolio. The asset allocation of your portfolio must demonstrate diversity across industries. This helps to prevent significant losses to your portfolio because of a downturn in one industry. Diversifying not only protects your assets from inflation, but from a major, devastating financial loss.
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Buy blue-chip stocks. Blue chip companies have great reputations, a history of earnings growth and are known for paying out dividends to their shareholders yearly. Over time, dividend payouts of blue-chips generally have far exceeded the rate of inflation.
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Invest in multi-national corporations. These companies are spread across the globe and usually can withstand an economic downturn in one of the countries in which it does business. Multi-national corporations are known for profits and dividend payouts that beat the rate of inflation, even during economic downturns.
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Buy an annuity. There are two types of annuities: variable and fixed. Both offer guaranteed income during retirement and both generally offer protection against losses, such as guaranteed interest, no matter how the market is performing.
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Tips & Warnings
Choose multi-national corporations that are well-established because they are subject to less market volatility than those multi-nationals that are relatively young.
Speak with a financial adviser who is trained to allocate the assets in your portfolio based on your stated needs.
Never invest in only one market or industry. This could lead to major losses if that particular industry suffers a downturn and offers you no protection against inflation.
