Wiser Wealth: How to Use Investing to Protect Against Inflation

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Inflation Graphic
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Inflation is a constant of the economy, however certain conditions can cause the inflation rate to spike higher than normal. Such a sudden change can throw off your plans for the future if all of your earnings are coming from your career salary alone.

People best prepared to weather the changes of inflation know that investments are oftentimes a strong buffer against losing value in your accounts. Forbes had a recent article on the subject, including some of the best investments you can make to be proactive against inflation.

A big part of why investments tend to be a sound strategy is because of inflation premiums, which are added to investments to account for inflation. That amount will generally be around 2% per year, aligning with what the country as a whole will usually see.

However, when inflation jumps unexpectedly, it is good to have contingency plans. One recommendation is to remain deliberate in your stock purchases, as making moves in a panic does not account for the fact that many assets adjust for inflation more slowly. Moving too quickly can cause you to overpay.

Forbes also stresses the importance of diversifying your assets. Putting all of your eggs in one basket is seldom a good idea, but you might postpone doing more to spread out where your earnings are coming from. Procrastinating can leave you caught off guard against big changes.

One option you might consider is Treasury Inflation-Protected Securities (TIPS). Though TIPS do have their own drawbacks to consider, as the name suggests they are designed so that you have an investment option safe against losses through inflation.

Fred Hubler, Chief Wealth Strategist for Phoenixville-based Creative Capital Wealth Management Group which services wealthy families in 28 states and specializes in retainer-based planning and alternative investment strategies, recommends his accredited investors reduce their stock market exposure and add historically defensive institutional options.

“We like hard assets like storage,” says Hubler. “Warehouses and necessity retail (think dialysis centers and grocery stores) are ideal.”

According to Hubler, “there is likely to be a perfect storm of higher taxes, higher inflation, lower bond values and lower stock market values happening simultaneously. So options that are not in the stock and bond market should be considered.”

The most important thing you can do to feel confident in your assets is to stay aware of the market and react accordingly. Everyone realizes right now that inflation is spiking at an unusual amount and that might not settle down for a while.

Rather than wait it out, now is the time to find your best options before you get put into a position of reacting instead of preparing.

To learn more about what you can do to keep your earnings strong during inflation, read the article from Forbes here.

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Fred Hubler Headshot

Want to know if you’re on the right path financially? Fred Hubler’s Second Opinion Service (SOS) is a no-obligation review with Creative Capital Wealth Management Group‘s Chief Wealth Strategist.

It’s simply not possible to get a reliable second opinion from the same person who gave you the first one. Click here to schedule an SOS meeting with Fred and his team.

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