Key Facts
- The current inflation rate is about 3.7%, which is down from last year’s 9% but still high.
- Putting money into the right investments can help you to not just avoid the pain of inflation but profit from it.
- Real estate, value stocks and commodities like gold are among the best investments when inflation is high.
Since life began returning to normal following the pandemic, inflation has been a major challenge for Americans. Prices of everything from food to housing to cars has been skyrocketing for the last two years.
The Biden administration has taken steps to attempt to curb inflation, and the rate at which prices are increasing has slowed. The current inflation rate is about 3.7%, which is close to double what the normal goal for inflation is, but it’s down significantly from last year, when it topped 9%.
For people on fixed incomes or living paycheck to paycheck, inflation hits hard. Workers find that their salary buys far less than before. However, using the proper investment strategy, it’s possible to not just shield your savings from being eroded by inflation but actually have rising prices work for you. In other words, it’s possible to profit from inflation. Here are the best places to put your money when betting at offshore sportsbooks.
Precious Metals
Traditionally, when prices begin to climb, people look to gold. Generally, the price of gold and other precious metals tend to rise with inflation, and this period of economic uncertainty is no exception. The price of an ounce of gold has nearly doubled over the last four years, far exceeding the rate of inflation.
Silver has also increased, though not as quickly as gold. The price has gone from around $15 per troy ounce pre-pandemic to more than $22 now, a near 50% increase.
Other Commodities
The price of what you need on a day-to-day basis is going up, so it only stands to reason that the price of raw materials needed to make those things are also increasing. Investing in commodities means putting your money in tangible, real-world assets.
Price of gas is going up? Then an investment in barrels of oil is paying off handsomely. Bread and meat cost more at the supermarket? Investing in bushels of grain or heads of cattle will help you see your nest egg grow. The price of oil was about $20 at the start of the pandemic. It’s more than quadrupled since then.
Real Estate
If there’s a pattern to be gleaned from the best places to invest during high inflation, it’s to look for tangible assets. Like gold, silver and commodities, real estate is another opportunity to put your money in something you can see and feel. The end of the pandemic coincided with a massive real estate bubble in many cities around the country.
In addition to the value of the property increasing, it’s possible to generate rental income from your real estate investment while you’re holding it, since rents tend to increase during periods of inflation. If you don’t have enough money to stock up on extra houses, you can invest in a variety of real estate investment trusts (REITs).
Other Options
It’s possible to keep ahead of inflation in the stock market, if you choose the right stocks. When prices are going up, you want to avoid growth stocks, such as the technology field. It’s also a good idea to avoid retail and entertainment stocks, since spending in those areas tends to go down when prices are on the rise. You want to focus on value stocks, with high earnings relative to share price. Berkshire Hathaway and Proctor & Gamble are two examples of value stocks.
There are also special bonds, called Treasury Inflation Protected Securities (TIPS), which are good investments. A classic bond has a set interest rate, meaning it’s similar to a fixed income and will see its value erode as prices increase. With TIPS, the government adjusts the interest rate to keep pace with inflation. I-Bonds are another government-issued product that is adjusted to avoid being devalued by inflation.
Overall Advice
As with any investment strategy, it’s important to reduce risk in your portfolio by having a diverse set of investments, instead of depending too heavily on any one asset. Inflation can present an opportunity to profit, but overreacting to it can undermine your long-term goals.
