Will Inflation Hurt Stock Returns. Not Necessarily.
Worried about inflation and how your financial plan will be impacted?
Our clients may wonder whether stock returns will suffer if inflation keeps rising. Here’s some good news.
A look at equity performance in the past three decades does not show any reliable connection between periods of high (or low) inflation and US stock returns.
Since 1992 the S&P 500 delivered average annualized return of 8.1% - after adjusting for inflation.
Going back to 1926, the annualized inflation-adjusted return on stocks was 7.3%.
Inflation isn’t necessarily bad news for equity investors.
Source: Dimensional
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