Inflation Risk definition

Inflation Risk. Inflation risk means the risk that the investor suffers pecuniary losses due to progressing currency devaluation (inflation). Economic trends which were inaccurately predicted or could not be foreseen may have adverse effects on future trends of the prices for financial instruments. The changes in the economic activities of a nation always affect the development of prices of financial instruments. Lending against a portfolio or securities account is an instrument which investors frequently use to remain solvent and thus remain able to take actions. Please note that you must first generate the interest owed on the loan granted to fund your investment before you will generate profits. In addition, you must repay the loan. As a result, the risk-reward ratio shifts. Since the financial instruments are used as collateral when lending against a portfolio, negative price trends may result in a decline of the collateral value of your portfolio due to the decline in prices. In that case, you are typically required to make additional payments and provide the lender with additional collateral in order to ensure sufficient security for the loan--otherwise, the loan may be cancelled. In extreme cases, securities in the account may be subject to a compulsory sale by the lender. This is the case in particular if the requested additional funds are not provided or not provided in a sufficient amount. In addition, there is no certainty that your securities account can be used in the future to fully settle your obligations. The investors’ taxation always affects the sustainable return on their investments. The treatment of gains and proceeds from securities and similar transactions for tax purposes may change. In addition to the direct impact on the investor, such changes can also impact the earnings position of companies and thus have adverse or favorable effects on the price trends of financial instruments. Before investing, please research the underlying tax conditions and treatment of the intended capital investments for tax purposes. Any commission and transaction costs incurred as well as recurring costs (such as portfolio management fees) affect the potential profits from the respective transaction. Therefore, please consider the ratio of fees and total net transaction value.

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Inflation Risk. This is the risk that the value of assets or income from investments will be less in the future as inflation decreases the value of money. As inflation increases, the value of the fund’s assets can decline as can the value of the fund’s distributions. This risk is significantly greater for fixed-income securities with longer maturities. • Foreign (Non-U.S.) Risk: Investments in securities of non-U.S. issuers may involve more risk than those of U.S. issuers. These securities may fluctuate more widely in price and may be more difficult to trade due to adverse market, economic, political, regulatory or other factors. • Emerging Market Risk: Investments in emerging market countries may have more risk because the markets are less developed and less liquid as well as being subject to increased economic, political, regulatory or other uncertainties.

Inflation Risk. Inflation impacts the value of investments and the future costs of claims through higher rehabilitation costs and wage prices. The value of fixed income securities in the investment portfolio, particularly those with long durations and fixed cash flows, typically decreases if expected inflation increases interest rates (the mechanism being as described under Interest Rate Risk above). The value of other investments, like equity and inflation-linked securities, or property assets, may increase with inflation.

Examples of Inflation Risk in a sentence

The risk associated with investing in bonds include, but are not limited to: • Interest Rate Risk; • Inflation Risk; • Credit and Default Risk.
Inflation Risk — Inflation risk is the risk that the value of assets or income from investment will be worth less in the future, as inflation decreases the value of money.
Inflation Risk The risk of decline in the purchasing power of your savings due to a general rise in prices.
Inflation Risk - Inflation risk is the risk that the value of assets or income from investment will be worth less in the future, as inflation decreases the value of money.
Inflation Risk Some of the pension obligations are linked to inflation, and higher inflation will lead to higher liabilities (although caps on the level of inflationary increases are in place to protect the Plan against extreme inflation).
For these reasons, your investment in the Fund is subject to the following specific risks: Inflation Risk.
Higher-yielding debt securities are generally unsecured and may be subordinated to certain other outstanding securities and obligations of the issuer, which may be secured on substantially all Inflation Risk.
Inflation Risk Inflation rates can impact the overall purchasing power of your investment.
The risk associated with investing in bonds include, but are not limited to:  Interest Rate Risk;  Inflation Risk;  Credit and Default Risk.
Inflation Risk – Inflation risk is the risk that the value of assets or income from investment will be worth less in the future, as inflation decreases the value of money.

More Definitions of Inflation Risk

Inflation Risk refers to the possibility that a portion or all of an investment’s return may be eliminated by inflation.