Best Strategies for Investing During Inflation

(MoneyHippo.com) – Given that the current inflation rate has ballooned to nearly 8%, reducing the value of every dollar spent, many wonder if there are any useful investments to inflation-proof their portfolios. In life, there are no guarantees, but there are some strategies investors could consider during periods of high inflation that could be beneficial to their bottom lines. In times of inflation, investors should look toward owning tangible assets because historically, they appreciate over time.

One method is to invest in real estate because its value tends to increase during inflationary periods, increasing owner equity. If a person owns an investment property already, they could consider increasing the rent to mitigate inflationary impacts on your wallet. Investors can also benefit from real estate appreciation by putting their money in real estate investment trusts (REITs).

Other tangible goods that usually increase in value during inflation are commodities like gold, silver, raw materials, and crops. Investors can buy physical commodities or invest in them through mutual funds that own various commodity investments tailored to withstand inflationary pressures.

When turning to the stock market, consider sticking to businesses able to pass investment costs onto consumers for items everyone needs. For example, stable food companies might be a wise investment, whereas a business producing TVs may not fare as well when times are tight for people.

One final fact to keep in mind: investing in anything comes with risks. Deviating too far from a set long-term investment plan because of current market conditions can derail a portfolio. However, taking a portion of funds to lessen the impact overall might be just the diversification the portfolio requires. As always, it’s best to speak with a financial professional before making any bold moves.