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Have you looked at your groceries lately? Inflation is kicking back, right? If you’re about to retire, this is one of your biggest enemies. Here’s how you can protect your portfolio from it.
01:44 Impact of Inflation in Your Portfolio
03:23 Solutions Against Inflation
07:34 The Metrics and Filters to Fight Back Inflation
11:45 Why Dividend Growers are The Best Protection
Why Investing in Gold Sucks
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Disclaimer: The information contained within this video channel is for informational purposes only, and it is not intended as a recommendation of the securities highlighted or any particular investment strategy; nor should it be considered a solicitation to buy or sell any security. In addition, this information is not represented or warranted to be accurate, correct, complete, or timely. The securities mentioned in this video may not be suitable for all types of investors and the information contained in this video does not constitute advice. Before acting on any information in this email, readers should consider whether such an investment is suitable for their particular circumstances, perform their own due diligence, and if necessary, seek professional advice….(read more)
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Inflation Protection: REITs, Commodities, Utilities and…
Inflation is defined as the rate at which the general level of prices for goods and services is rising and, subsequently, purchasing power is falling. Inflation is a complex economic phenomenon that has both positive and negative effects on the economy. A little inflation is generally considered healthy as it encourages consumer spending and corporate investment. However, prolonged and excessive inflation can lead to economic instability, which can ultimately result in the devaluation of currency and the erosion of savings.
Historically, investors have sought safe investments to hedge their portfolios against inflation. Rising inflation rates erode the value of traditional investments like stocks and bonds. Inflation protection investments are an alternative investment strategy that attempts to protect investors from the impact of inflation on their investment portfolios. In this article, we will discuss some of the most effective inflation protection investments which are REITs, Commodities, and Utilities.
REITs: Real Estate Investment Trusts (REITs) are one of the most effective investments to hedge against inflation. They are companies that own and operate apartment buildings, office space, industrial facilities, shopping centers, hotels, and other real estate properties. When inflation rises, property values and rents typically increase, which helps to protect the value of REITs. In addition, REITs are required by law to distribute 90% of their earnings to shareholders as dividends, which can help to offset inflation.
Commodities: Commodities like gold, silver, oil, and other precious metals can also serve as a hedge against inflation. When inflation rises, the prices of commodities tend to increase in value. This is because many commodities are priced in U.S. dollars, which makes them more expensive to buy as the value of the dollar is eroded by inflation. The rise in commodity prices can result in higher profits and dividends for companies that extract, produce or distribute them.
Utilities: Utilities offer a defensive approach to inflation protection investing. They are companies that provide essential services such as electricity, water, gas, and telecommunications. Unlike stocks and bonds, utilities tend to have a low correlation to the overall stock market. This means that during a stock market downturn, utilities tend to remain stable or even rise in value. Utilities companies generally have a high level of dividends, which can help to offset inflation.
Conclusion:
Inflation protection investments are an effective way to hedge against the impact of rising inflation on an investor’s portfolio. Investing in REITs, Commodities, and Utilities can help to protect an investor against inflation and provide steady cash flow through dividends. Ultimately, a diversified portfolio that includes a variety of these investment strategies can help to achieve long-term financial goals while effectively managing risk. As always, it is essential to conduct your research and seek professional advice before making any investment decisions.
Mike, you only showed gold to 2020. Why not 2022? I'm a buffet style "anti-gold" investor like you. But if central banks don't allow interest rates higher, then inflation goes higher instead. Inflation can only go so high before an alternative currency is needed. Have you planned for that? Which do you predict, higher interest rates? Or higher inflation?
Won't utilities and REITs do bad when interests rates go up though?
Any dividend growers etf?
Health is the best hedge against inflation
Aren't REITs typically poor dividend growers? Case in point, the XRE index's dividend has barely grown over the last 10 years (in fact, 0.062 in 2012 vs 0.057 in 2022)?
Enjoyed this video!!!
Gold is actually an amazing hedge for inflation, only if you can manage to live for for at least a few hundred years,
How do the Credit and value scores work?
I like the way Buffet referenced gold. He said if you get all the gold in the world, it will fit on one football field, and if you leave it and come back twenty years later, it's still sitting there. It hasn't produced anything, paid a dividend, or expanded the business, it just sits there, and the only way you can benefit from it is if someone will buy it from you at a higher price than you paid.