Diversify your portfolio
Discover how income could act as a possible source of resilience*
The world is grappling with inflation that has reached a level we have not witnessed in many years. This phenomenon is especially visible in developed markets (DM) and is driven by multiple shocks (such as supply chain bottlenecks and geopolitical tension) as well as the tail end of the Covid-19 pandemic.
In this complex scenario, we believe that achieving real income will be a key element for investors seeking to mitigate the negative effects of inflation.
*Diversification does not guarantee a profit or protect against a loss.
How did we get here?
European households have constantly increased their exposure to cash, accumulating funds into bank deposits since 2016. This phenomenon has been particularly exacerbated by the Covid-19 pandemic, where objective constraints to spending have further supported this increasing trend. The amount of money amassed by households grew by €3,000 bn between 2016 and 2021, roughly 28% of their financial wealth.
However, inflation has been on the rise and has eroded a significant portion of the purchasing power of the money saved. By the end of 2022, the accumulated loss since 2016 is expected to reach roughly €1,400 bn.