When hedge funds first came about many people outside of the financial industry did not know what hedge funding was. Well, new research by Dr. Davenport and Dr. Credle of Hampton University show that hedging can be simplified and utilized by regular consumers. In addition, their study reports that investing your money in stocks to lessen the impact of inflation is actually an attainable hedging activity. For example, here we have the equalization hedge formula.
The CPI is the Consumer Price Index and the dividend (Div) is stick payout from the company. The share price (sh), market value of shares (MV), and I (average dividend tax rate) are combined to give you a Equalization Hedge (EH) number. This may still be somewhat confusing, so we revisit, "What is hedging?" Well, it's like insurance. It's reassuring that you have enough money to cover expenses. Many people are familiar with having Christmas funds and Christmas accounts to ensure that you can buy toys for Christmas. This is what investing does when you are hedging against inflation. If you assume there's going to be inflation and if you are indeed correct, then the prices of certain services and products will increase. If you have invested prudently, that increase will not cause your current income to depreciate -even you do nit get a raise. So, realistically because the market does exist you do not need a raise [napkof]. For more indept summary of business research shop our LESTERMONEY: LATEST AND GREATEST IN BUSINESS RESEARCH IN LAYMAN'S TERMS on Amazon.