5 Investments to Protect Your Money From Inflation

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Inflation describes a situation where the economy is negatively impacted, causing a steady rise in the prices of goods and services. If you have money stashed away in a savings account, it is likely to keep reducing its value; inflation chips away from your investment returns and erodes your purchasing power.

If you fail to plan for your money, inflation can undermine your financial goals and negatively impact your living standards. Fortunately, with the following investments, you can protect your money from inflation.             

1. Government bonds

If you haven’t invested in government bonds, start considering it; bonds are fixed-income products that buffer your portfolio and minimize its risks. They also help to diversify assets in your portfolio and provide stability and anchor for investing. Another advantage of investing in government bonds is the avenue the fixed-income offers to help you back-calculate the amount of money you’ll make in the future. You can, therefore, invest more money in bonds and escape the inflationary pressure.

2. Gold

Are you wondering what is the gold standard? This is the period before the great depression when America’s development was at its finest and people traded with gold. Gold is seen as a hedge against inflation, and in some countries where the currency loses value, it is considered an alternative. For the most part, even during inflation, gold is an actual physical asset that holds its value.

3. Commodities

Commodities vary and are of broad categories, but they have a relationship with inflation. Commodities such as natural gas, oil, orange juice, emissions, and beef can be inflation indicators. However, as their prices increase with inflation, so do those of production goods. Before you invest in commodities, you should know that they are highly volatile; hence you should be cautious when trading them. Commodity prices are subject to market factors like demand and supply; a slight change like conflicts or geopolitical tensions can negatively affect their costs.

4. Real Estate

You can earn income from real estate by renting out property; it works well with inflation. When there is inflation, property values increase, and so does the amount you can charge for rent. Over time, you can improve your earnings from rent; hence you don’t suffer the consequences of inflation. However, remember that the initial investment is usually high, and with time, maintenance and management costs add up.

5. The Stock Market

The stock market usually out spaces inflation, making equity investment effective. However, since rapid inflation highly affects businesses, they tend to absorb higher prices to maintain productivity levels. In this sense, although the stock market can hold out for long periods, it can fall in a short period if the inflation levels spike. Provide defense for your portfolio by investing in stocks from companies that go unscathed during inflation.

Save more money during inflation periods by investing in areas and items that can withstand it. Invest in commodities such as production goods, gold, and the stock market in companies that weather inflation pressures. Consider getting into real estate and investing in government bonds that maintain their value even in the future.

 

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