The graph below depicts the bond market’s performance in 2008. During the financial crisis of 2008-2009, the returns reflect normalized total returns of major bond indices. The S&P 500 is also used as a comparison point. While bonds outperformed equities by a considerable margin throughout this period, the fixed income sector still has a wide […]
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Inflation protection is a provision of some insurance plans that allows future or ongoing payouts to be increased upward in accordance with inflation. The purpose is to ensure that the relative purchasing power of money awarded as benefits does not decline due to inflation over time. Inflation protection on an insurance policy can be achieved
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Bonds that are inflation-indexed can be purchased in a variety of ways. TIPS can be purchased directly from the United States Treasury or through a brokerage account. Some mutual funds and exchange-traded funds also hold them. Consider trash bonds if you want to take a riskier approach. When inflation rises, high-yield debt, as it’s formally
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During a recession, unemployment tends to grow quickly and stay high for a long time. As a result of higher costs, stagnant or declining revenue, and greater pressure to cover debts, businesses tend to lay off workers in order to save money. During a recession, the number of jobless workers rises throughout many industries at
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Home values have historically kept pace with inflation, and if you have a mortgage, you may lock in a fixed monthly payment for the life of the loan. “Homes are expensive now,” Zillow senior economist Jeff Tucker said, “but for most individuals, the most relevant comparison is how that cost of home ownership compares to
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If you use at least one of these investment strategies, you will be able to offset the impact of inflation. If you stick to the first two, you’ll be fine as inflation starts to rise. Follow three, and let your imagination run wild! Buy Physical Gold and Silver You may totally protect yourself against inflation
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GDP, or gross domestic product, quantifies the economy’s overall output, including activity, stability, and growth of products and services; as a result, it’s used as a proxy for the economy. The standard of living is calculated using per capita GDP, which is calculated by dividing GDP by the country’s population. GDP can thus be used
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The United States of America In many other ways, the Great Depression and the Great Recession were identical. During both, the US economy experienced a sharp drop in output after a long period of economic expansion highlighted by financial excesses. What similarities and differences exist between the Great Depression and the Great Recession? A recession
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Bonds’ deadliest enemy is inflation. The purchasing power of a bond’s future cash flows is eroded by inflation. Bonds are typically fixed-rate investments. Inflation (or rising prices) reduces the return on a bond in real terms, which means adjusted for inflation. When a bond pays a 4% yield and inflation is 3%, the bond’s real
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Venezuela has the highest debt-to-GDP ratio in the world as of December 2020, by a wide margin. Venezuela may have the world’s greatest oil reserves, but the state-owned oil corporation is thought to be poorly managed, and the country’s GDP has fallen in recent years. Simultaneously, Venezuela has taken out large loans, increasing its debt
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