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You don’t need to keep a keen eye to understand that we’re in the middle of an inflation the likes of which hasn’t been seen in ages. All it takes is a trip to the grocery store or an incoming utility bill.
Here’s the kicker. Inflation can quietly deflate your wealth — everything you’ve worked so hard for all your life — within years. If you don’t take proactive steps to combat the effects of inflation, you and your family will suffer financially.
The good news? You may not be able to control the global economy, but you’re not powerless in the fight against inflation, either. Join us for a look at sensible investments for tough times.
Investments that combat inflation are those that can outrun the pace of inflation. Gold and other precious metals like silver, platinum, and palladium have a proven ability to retain their value (and even appreciate) during times of inflation.
These metals are coveted “safe-haven” investments, assets that remain stable against all odds. The fact that precious metals like gold are also tangible assets that you can hold physically makes them even more appealing during periods when people fear the collapse of traditional financial institutions.
Investing in real estate, including buy-to-rent properties, can be scary during times of inflation. Some people will be tempted to wait until the economy crashes. However, real estate can also offer a valuable hedge against inflation. As prices keep rising, so too will rents. Well-positioned investors can profit from this.
Periods of inflation can also be a great time to invest in the stock market, but proper market research is essential. Look for companies with strong fundamentals, a proven ability to survive turbulent economic times, and decent earnings growth projected to last.
The stock market is never risk-free, and risks may increase during periods of inflation. Play your cards right, however, and the gamble can pay off.
Treasury Inflation-Protected Securities (TIPS) are designed to hedge against inflation. They’re available for five, 10, and 30 year terms, and don’t have a fixed principal.
If your TIPS has risen in value to the point where the principal exceeds the original amount upon maturity, you reap the benefits of the difference. If the principal is lower, you get the original amount. This interesting proposition makes TIPS a win-win solution to combat inflation.
It sounds cliché, but it’s a good idea anyway. Inflation can quickly get you down and make you pessimistic about the future. Don’t let it. Now’s the time to invest in education or other ways to expand your skill set.
The economy is changing. So is the geopolitical landscape. Where will you be when the current period of inflation ends? Ensuring that you’re equipped to deal with the future is the best investment you could ever make, so invest in your professional development during this time.
Inflationary periods are an inevitable part of the economic cycle. They’re never fun, and they are usually frightening. Equipping yourself with the right tools, and making smart investment choices, helps to ensure that you come out of inflation healthy and sound, however.
The choices you make right now could make or break your future, so consider diversifying your portfolio and investing in alternative assets that will pay dividends for years to come.