It’s no secret that inflation has made investing tough. You’re trying to make sure your money grows, all while inflation eats away at your savings and devalues your portfolio.
The rising cost of living is a major concern for everyone, but if you have savings already, you might just need to pivot your investment strategy to find a way to get ahead. These are some of the assets with a proven track record of protecting investments against high inflation.
#1 Gold Bullion
Gold and, to a lesser extent, silver bullion have long been regarded as powerful inflation hedges that can help preserve value when inflation is outpacing interest rates.
Gold plays a useful niche in any portfolio. It’s defensive and maintains value when the currency is being devalued.
If you’re interested in adding bullion to your portfolio, dealers like Global Bullion Suppliers can walk you through all of the details you need to know, including which products are best for you and how to get the best possible prices.
#2 S&P 500 Index Funds
The S&P 500 is one of the strongest markets in the world. Between 2012 and 2022, the index averaged annual returns of 11%. After inflation, it worked out to 8.3%. While it can be tougher for stocks to overcome inflation at higher rates, the S&P 500 remains one of the markets with the strongest and most reliable growth.
You don’t need to pick individual stocks, either. Many ETFs and mutual funds allow you to invest in a basket of stocks meant to replicate growth on a stock market index, and the S&P 500 is one of the more popular options.
#3 Stocks in Industries that Raise Prices
During periods of high inflation, companies that have the power to raise prices are going to outperform those that don’t have as much wiggle room. Look no further than grocery companies that have been seeing record profits.
The companies that will likely see the most success during periods of high inflation sell goods that are hard to cut back on. Other sectors that can thrive despite inflation include energy, pharmaceuticals, and anyone who makes essential consumer goods.
#4 Real Estate
When inflation is high, assets that are finite and scarce can quickly become more valuable. Real estate is one of them and one of the more reliable long-term assets. The real estate market at the moment has certainly been impacted by rising interest rates, and it’s not necessarily a great time to buy, but it’s the kind of asset that can help you prepare for a future recession.
If you can’t afford to buy property yourself, REITs offer a compelling alternative for including real estate in your portfolio.
#5 Guaranteed Investment Certificates
A GIC is a fixed-term deposit that promises a guaranteed return. They are usually offered through your financial institution and provide a fixed or minimum interest rate over a fixed period of time.
One of the issues with long-term investments like bonds is interest rates can change rapidly on them, and if interest rate hikes slow or reverse, inflation can wind up eating away all of your gains.
GICs can make your returns much more predictable, as they guarantee a minimum return. That’s hard to find with most of other assets.
There are assets out there that can help you beat inflation. Diversify your portfolio and don’t let high inflation get in the way of your savings.