INFLATION HEDGE के रूप में क्या काम करता (और क्या काम नहीं करता) है ? ET Money Hindi
No one likes high inflation. And yet, that’s what India and other countries are facing. With high and rising inflation posing a big threat to our standards of living. Now, as investors we are exposed to inflation in many ways. There are interest rate changes, consumption patterns can change overnight, growth projections might go for a toss, all of which can bring down our investment portfolios by quite a bit.

ENERGY
Energy as an asset class delivered an average of 41% returns across the 8 high inflation periods that haunted the United States from 1926 to 2020. But from the looks of it, periods of supply-driven inflation remember, not demand but supply-driven inflation seems to bring out the best from energy investments and that’s something investors might want to look out for.

Having said this the energy sector does come short when it presents itself as a long term asset class. So while there is that 41% real return during high inflation periods the energy sector averaged a negative 1% return during periods of low or manageable inflation.

GOLD
Since 1971, the price of gold has grown by about 50 times and so has inflation and it is this apparent correlation between gold and inflation that has led many to believe that gold is a good inflation hedge. You see, If gold were a good and consistent inflation hedge then the ratio of its price to the consumer-price index should have been relatively steady over the years. Firstly, having some gold in your portfolio is useful as it effectively counteracts high inflationary periods plus gold has a weak correlation with equities. Secondly, keeping gold as an asset over the long-term does give reasonable returns but is unlikely to beat equities so that’s another point one needs to keep in mind.

REAL ESTATE
Firstly, there’s the fact that real estate is an income generating asset and investors do flock towards such safer assets when inflation rises. Secondly and just like what we see with gold or commodities there is the scarcity factor as there is only a limited amount of real estate to work with.

EQUITIES
Equities have traditionally been viewed as an inflation hedge on the premise that a company’s revenues and earnings would also rise with inflation over the course of time. If you are a long-term investor then your equity investments will probably and handsomely beat inflation but if you are more tactical, then you can do some further research around these specific sectors before considering investing in them

CRYPTO
Cryptos have a limited supply, they are fungible, meaning one bitcoin can be exchanged for another without any loss in value, they’re also easily accessible, have growing acceptance and cryptos have proven to appreciate in value. But cryptocurrency prices are extremely volatile on account of the speculative activity surrounding and it is hard to see if there will ever be any actual price discovery in this asset.

SUMMARY
Firstly, if you are an accumulator then relying on equities to beat inflation is a tried, tested and successful strategy which is likely to persist for many more decades. Secondly, investors can explore some reliable buy-and-hold methods to hedge inflation like creating a ladder of individual gilt funds of different maturities. And thirdly, with multiple assets performing differently at various inflation gauges the importance of asset allocation and timely rebalancing only multiplies which is where ET Money Genius and it’s intelligent investing service comes in.

📖 Chapters:
00:00 Introduction
03:05 Energy as Inflation Hedge
04:40 Gold as Inflation Hedge
07:30 Real Estate as Inflation Hedge
09:05 Equity as Inflation Hedge
10:25 Crypto as Inflation Hedge
11:25 Summary

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LEARN ABOUT: Investing During Inflation

REVEALED: Best Investment During Inflation

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Inflation is a constant worry for individuals, especially in today’s economic climate where prices seem to be rising constantly. The purchasing power of our money diminishes as prices of goods and services increase, making it important to find ways to protect our savings from the impact of inflation. One way to do this is by investing in instruments that act as a hedge against inflation.

ET Money, a popular investment platform in India, offers several options for individuals looking to protect their savings from the effects of inflation. By investing in these instruments, investors can ensure that their money continues to grow in value, even as prices rise.

One of the most popular ways to hedge against inflation is by investing in equities. Historically, stocks have been known to provide returns that outpace inflation, making them a good option for long-term investors looking to protect their savings. ET Money offers a range of equity mutual funds that investors can choose from based on their risk appetite and investment goals.

Another popular option for inflation hedging is investing in commodities like gold and silver. These precious metals have long been considered a safe haven for investors during times of economic uncertainty and inflation. ET Money offers the option to invest in gold and silver through ETFs and mutual funds, allowing investors to easily add these assets to their portfolio.

Real estate is another popular choice for investors looking to hedge against inflation. Property prices tend to rise over time, making it a good investment option for those looking to protect their savings from the impact of inflation. ET Money offers the option to invest in real estate through real estate mutual funds, allowing investors to diversify their portfolio and benefit from the potential growth in property prices.

Overall, investing in instruments that act as a hedge against inflation is important for individuals looking to protect their savings from the impact of rising prices. ET Money offers a range of investment options that can help investors achieve this goal, allowing them to continue to grow their wealth even as prices rise. By investing in equities, commodities, and real estate through ET Money, investors can ensure that their money retains its value over time.