In this short video Staci West covers how you can inflation-proof your investments along with some funds worth considering in this space. We discuss why cash savings accounts can pose a problem [0:24], how to mitigate the risk [0:44] and why some companies do better than others in inflationary environments [1:02]. Finally we touch on real assets and property as opportunities to inflation-proof your investment portfolio [1:30].

To learn more about the different types of inflation, watch our last video:

To learn more about the funds mentioned in the video please visit …(read more)

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Inflation-proofing your investment portfolio

Inflation is a persistent rise in the general price level of goods and services in an economy over a period of time. It erodes the purchasing power of money and can have a detrimental impact on the value of investment portfolios. As such, it is important for investors to consider strategies to protect their portfolios from the effects of inflation.

Here are some ways to inflation-proof your investment portfolio:

1. Diversify your investments: Diversification is a key strategy for managing risk in an investment portfolio. By spreading your investments across different asset classes such as stocks, bonds, real estate, and commodities, you can minimize the impact of inflation on your portfolio. Different asset classes have different sensitivity to inflation, so diversifying your investments can help to offset the effects of rising prices.

2. Invest in inflation-protected securities: Treasury Inflation-Protected Securities (TIPS) are a type of government bond that is indexed to inflation. The principal of TIPS increases with inflation and decreases with deflation, providing a hedge against rising prices. Investing in TIPS can help to protect the purchasing power of your portfolio in an inflationary environment.

3. Consider real assets: Real assets such as real estate, commodities, and infrastructure can provide a hedge against inflation. These assets have intrinsic value and tend to perform well in periods of rising prices. Investing in real assets can provide diversification and protection against the erosion of purchasing power caused by inflation.

4. Focus on dividend-paying stocks: Companies that have a history of paying consistent and growing dividends can provide a source of income that can help to offset the effects of inflation. Dividend-paying stocks can provide a steady stream of cash flow that can help to maintain the value of your portfolio in an inflationary environment.

5. Re-evaluate your fixed-income investments: Fixed-income investments such as bonds can be particularly sensitive to inflation. Inflation erodes the purchasing power of fixed-income investments, so it is important to consider how rising prices will impact the value of your bond holdings. Investing in shorter-term bonds or bonds with floating interest rates can provide some protection against inflation.

Inflation can have a significant impact on the value of investment portfolios, so it is important to consider strategies to inflation-proof your investments. By diversifying your portfolio, investing in inflation-protected securities, focusing on real assets, considering dividend-paying stocks, and re-evaluating your fixed-income investments, you can help to protect the purchasing power of your investment portfolio in an inflationary environment.