What are the effects of inflation on investment returns (ROI)?

[Good-Person]

Inflation is having a very bad effect on many businesses. This is why there are many different kinds of people who think that the only way to deal with inflation is to invest money. Having said that, when you invest money in any kind of investment opportunity, do you think that inflation could have any kind of bad effect on return on investments?

 

[ganibade]

Inflation is having a very bad effect on many businesses. This is why there are many different kinds of people who think that the only way to deal with inflation is to invest money. Having said that, when you invest money in any kind of investment opportunity, do you think that inflation could have any kind of bad effect on return on investments?

Over time, inflation reduces the purchasing power of money. The actual (inflation-adjusted) return decreases when inflation is higher than your investment returns, which lowers the value of your investment. Investments should normally outperform inflation to sustain or increase wealth.