What are inflation indexed bonds?

Inflation indexed bonds, also known as inflation-linked bonds or simply linkers, are fixed-income securities whose interest and principal payments are adjusted for inflation. The value of these bonds is directly linked to a specific inflation index, such as the Consumer Price Index (CPI), which measures changes in the price of a basket of goods and services over time. This means that if inflation rises, the value of the bond’s future cash flows increases, and if inflation falls, the bond’s value decreases. Inflation indexed bonds are designed to protect investors from the eroding effects of inflation on their investments, making them a popular choice for those seeking a more secure long-term investment.

The effects of interest rates are often not directly felt but play out over a long time as valuations of real-estate and other assets adjust.

At Horizon65, we created a mobile app that enabled you to check the effect of high interest rates on your savings and to simulate potential investments that can defend against it.

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