If an investor blieves inflation will be relatively strong i

If an investor blieves inflation will be relatively strong in the future, what types of assets should they prefer? Real or Financial Assets? Why?

Solution

In case of inflation being higher it is better to buy real assets since the price of real assets tend to appreciate as inflation goes higher. For example commodity or real estate prices go higher as imflation rises. On the other hand financial instruments like bonds and equity tend to fall as interest rates rise.