Five Ways To Beat Inflation

Investments in an Inflationary Environment

Is your portfolio ready in case of inflation? With inflation, the world will have to deal with rising food and energy prices, lower stock performance, depreciating currencies, and high interest rates. So how do you make money in that type of market? Here are five proven investments that tend to outperform during inflationary environments. 

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1). Gold

Gold is usually considered to be one of the most reliable assets during an inflationary environment. This is because owning one ounce of gold can constantly buy you the same thing. For instance, one ounce of gold 2000 years ago would have purchased a fine custom toga in ancient Rome. Today, one ounce of gold can buy you a nice custom suit. 

How to invest in gold 

You can easily invest in gold by purchasing gold coins or bars at a bullion dealer. When you purchase your gold, you can take it into possession or have it stored by a custodian. You can also buy the SPDR Gold ETF (GLD), which tracks the movement of gold. 

2). TIPs (Treasury Inflation-Protected Securities)

TIPs or Treasury Inflation-Protected Securities are bonds that are indexed to inflation to protect the investor from the decline of purchasing power. When inflation rises, the interest paid by the bond also rises. Many conservative investors like to buy TIPs for their retirement. 

How to invest in TIPs

You can buy TIPs directly from the United States Treasury through the site Treasury Direct. You can also buy TIPs through a broker. Another option is to buy an ETF that tracks the performance of TIPs. A top TIPs ETF is the iShares TIPS ETF (TIP).

3). REITs (Real Estate Investment Trusts)

During times of inflation, finite items will tend to go up in price. For instance, real estate tends to outpace inflation because it is in finite supply. To help you invest in real estate, you can purchase an interest in a Real Estate Investment Trust or REIT. A REIT will pay out 90% of its income to investors in the form of royalty. REIT are available in a number of different categories, including Healthcare REITS, Mortgage REITs, and commercial REITs.

How to invest in REITs

You can purchase shares of a REIT, much like a stock. Some of the top REITs include Realty Income (O), Digital Realty Trust (DLR), and American Tower (AMT). 

4). Oil 

Much like gold, oil is another commodity that is popular during times of inflation. That is because there is always a demand for oil, and people are willing to pay any price to get fuel for their car or their vehicle’s business. 

How to invest in oil 

Sophisticated investors will buy oil future contracts. However, for the average investor, the best way to invest in oil is to purchase shares in the US Oil ETF known as the United States Oil Fund (USO). 

5). Mining Stocks 

Mining stocks are companies that are able to bring commodities to market. Hence, mining stocks tend to outperform during times of inflation. In fact, mining stocks tend to outperform their underlying commodity. 

How to invest in mining stocks 

You can purchase a number of publicly-traded mining stocks. Top mining stocks include Barrick Gold (GOLD), First Majestic Silver (AG), and Freeport Mcmoran (FCX). 

Protecting your investments during times of inflation 

It is a good idea to be prepared for times of inflation. Consider one or more of the top inflation investment strategies. With a well-diversified portfolio, you will have an opportunity to profit in almost any market environment. 

REFERENCE:

https://www.investopedia.com/articles/investing/081315/9-top-assets-protection-against-inflation.asp