Inflation = sustained increase in prices over time. Erodes purchasing power of money. If inflation is 5% and your investments return 5%, you're standing still — not getting wealthier.
📊 Inflation Types
- Demand-pull: Too much money chasing too few goods
- Cost-push: Production costs rise (oil, labor)
- Wage-price spiral: Wages and prices feed each other
🎯 Impact on Assets
- Cash: Loses value — worst place during inflation
- Bonds: Lose value when rates rise to fight inflation
- Stocks: Mixed — pricing power companies (consumer staples, energy) outperform
- Real estate: Good hedge — rents rise with inflation
- Gold: Traditional hedge — limited supply
- Bitcoin: "Digital gold" — fixed supply 21M
- TIPS: Treasury Inflation-Protected Securities — explicit inflation protection
📈 Vietnam Context
- VN inflation 2024-26: 3-4% (controlled)
- USD/VND inflation differential affects exporters/importers
- Hedge: VN companies with USD revenue (FPT, MSN)