An item that costs $1 today, cost $0.04 in 1913… Want to take advantage of inflation and increase returns?
As investors, we can take advantage and profit from inflation. Here are the best 2 ways to do so.
With current interest rates, this is one of the best protectors against inflation.
A 30-year fixed mortgage.
With current interest rates around 4.5% in the US, it’s an excellent hedge against inflation. Why?
The value of real estate goes up with inflation, a fixed mortgage rate doesn’t. You win.
Want to win for the 2nd time?
You can do so by owning good businesses.
Good businesses can increase their prices, which impact you. Higher prices mean higher profits, thus higher dividends. You win again.
Inflation can be high or low, but nonetheless, it diminishes the value of your currency. By keeping an open mind, you can do the opposite and make inflation our friend.
Want to know more about what I do?
Full-time independent stock market analyst and researcher!
STOCK MARKET RESEARCH PLATFORM (analysis, stocks to buy, model portfolio)
I am also a book author:
Modern Value Investing book:
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I am also learning a lot by interning with my mentors: dr. Per Jenster and Peter Barklin at the Niche Masters fund.
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LEARN ABOUT: Investing During Inflation
REVEALED: Best Investment During Inflation
HOW TO INVEST IN GOLD: Gold IRA Investing
HOW TO INVEST IN SILVER: Silver IRA Investing
Inflation and Investing – How to Make Money!
Inflation is a term that we often hear thrown around in discussions about the economy. It refers to the general rise in prices of goods and services over time. While inflation can erode the purchasing power of your money, it can also present opportunities for investors to make money.
One common misconception about inflation is that it is all negative. While it is true that rising prices can make your dollars buy less, it can also increase the value of certain assets. The key is to understand how inflation works and to make educated investment decisions accordingly.
One investment option to consider during inflationary periods is real estate. Historically, real estate has been an effective hedge against inflation. When prices rise, the value of properties typically increase as well. Additionally, rental income tends to rise in line with inflation, making real estate a potentially lucrative investment.
Another investment avenue to explore is stocks. Certain industries tend to perform well during inflationary periods. Companies in sectors such as energy, materials, and commodities often see increased profitability as the prices of raw materials rise. By investing in stocks of such companies, you can capitalize on their success and potentially earn substantial returns.
Investing in bonds can also be a viable strategy during inflation. Inflation erodes the purchasing power of fixed-income instruments like bonds. However, bonds that offer a floating interest rate or are tied to inflation protection measures, such as Treasury Inflation-Protected Securities (TIPS), can provide a safeguard against rising prices. These instruments provide investors with returns that keep pace with inflation, ensuring that their capital doesn’t lose value.
Additionally, investors can consider diversifying their portfolios by investing in commodities like gold and silver. These precious metals have traditionally been seen as safe havens during times of inflation. As the value of paper currencies declines, the demand for tangible assets like gold and silver tends to increase, leading to an appreciation in their value.
It’s worth mentioning that investing during inflation requires careful research and analysis. It is essential to thoroughly evaluate the economic landscape, track inflation rates, and understand the potential ramifications on different asset classes. Consulting with a financial advisor or conducting thorough market research can greatly benefit investors looking to make informed decisions.
While inflation can be a cause for concern, it doesn’t necessarily spell doom for investors. By understanding the dynamics of inflation and making wise investment choices, it is possible to not only protect your wealth but also potentially grow it during inflationary periods. Whether it’s real estate, stocks, bonds, or commodities, a well-diversified investment portfolio can help you weather the storm and potentially come out on top.
Ive always heard Bonds are a bad investment because of how long they take to mature.
One thing many investors keep missing as a great investment tool. Classic cars! I restore and sell classic cars. Been doing so for over 20 years. I average at least 30% profit on the sale of each vehicle. You can buy them needing minimal investment. And still get a nice return on investment.
Love tour Work.
You just sound a lot like dr. Nick from Simpsons
'Nobody knows what is going to happen with inflation in the next 10, 20 years'….um…yes they do.
EVERYONE is projecting increased inflation rates for the USD over the next decade. As of early March2021, 40% of ALL USD in circulation were created in the past 16 months… The question isn't high inflation or not, its Hyperinflation or just high inflation.
Just took out as big a mortgage as I could at 1.5% fixed rate.
GREAT INFO..VERY INFORMATIVE.NO OFFENSE BUT YOU SOUND LIKE Balki Bartokomous from the 80s TV show Perfect Strangers.
Amazing Video again. Glad you have it posted in here. Thanks
I was earning the same amount in 2006. FML.
I make huge money due to inflation and price increase in house mortgages compared to any investment .. the reason is missed by many investors.. you only pay 20 percent cash and get a loan for 80 percent .. 1 to 4 ..so if inflation and house price increase are %5 annual in actual life you make 5 x 5 = 25 percent return .. what about the interest cost of the mortgage? no worries 🙂 rent pays it all … roughly %12 of the home price in the USA and %7 in Turkey.
I make an annual %40 ROI in USD, %100 ROI in local money by buying many homes on a mortgage at the same time with a mortgage. The higher the inflation, the better the return .. I have a youtube channel in Turkey promoting this idea
Stock Market is done.
Inflation good or bad for banks ?
Great video. Fed and ecb will print more and more money
Hi sorry I am new to this and i would like to apologize in advance if my question is stupid. Wouldn't buying a house with a fixed mortage only give you the illusion of an increase in wealth if you take into account inflation ? Isn't this process betting on the value of the house going up ? If you take into account inflation but buy a piece of property where there is no economic prosperity, isn't the purchasing power from selling that plot of land going to remain the same ?
Helpful tip. Remember the rule of 72.
72 divided by the annual inflation rate equals the number of years it takes for your currency to drop by half in purchasing power. At 10% annual inflation 72/10=7.2 years.
Tip 2
when inflation gets to be 10% per month or more you can make profits bu buying a product that sells quickly and holding it for a few months then selling it to pocket the difference in cash. immediately buy an inflation proof commodity like gold with the profits.
So if inflation is high you can buy 100 tons of corn and hold it for a few months. Then sell it as above. you may not even need to move the product. just pay the storage fees and leave the corn at the silo.
on a small scale buy things that people see as a convenient safe place for their wealth and hold it for a time to keep your wealth safe from government and bankers inflating the currency. gold and silver are the best commodities for this but food stuff like rice, corn and wheat work well too.
Can you do a video on investing or what to do to keep us safe from hyperinflation?
Go out and buy a lifetime of Forever postage stamps
Interest rates on a mortgage in Germany are 1.8 percent, crazy.
Down here we have an inflation of 40%!!
Another great educational video. Constructive feedback: this video was rendered to SD 720p at 60 frames per second. Higher frame rates are for editing, like slow motion. You're better off rendering to HD 1080p at 30 fps. That way it's a larger image overall.
welcome to Slovenia 🙂
And what about Gold, Silver and Bitcoin? They are very effective reserve of value that protects you against inflation… And you don't depend from banks…
Are you calculating the positive inflation correctly (from the date in the past to today)?… I think not… for example from 0.65 to 1 is 53.8%…
Why no mention of precious metals?
Excellent video Inflation hidden tax
Please talk about how to spot a zombie company, i think GE is a zombie company but im not sure
hi sven, did you ever looked at jeronimo martins the portuguese retailer? its offering 4,7 percent dividend
Summary of the video:
1) 30 year fixed rate mortgage (In my opinion 1) should have bought at the start when IR dropped, not now when RE priced are high, now is too late. 2) I don't like debt 3) you are betting on rising inflation or hyperinflation – what if you get DEFLATION?! like in Japan? Then your mortgage debt bet turns sour REAL FAST)
2) Stocks/Indexes (same as above – don't take debt, play safe.)
3) Commodities (Gold historically IS NOT an inflation hedge (check it yourself on graphs). Gold is a CRISIS hedge – however hyperinflation is a crisis. But get this logic: when you have hyperinflation ANY OTHER currency or in fact ANYTHING OTHER THAN the hyperinflating currency will do just as fine as gold. But if we are talking GLOBAL CRISIS, yes gold will do better than the hyperinflating currency AND OTHER CURRENCIES.)
Where can I find a 25 fixed rate mortgage in Canada? and why is it so hard to find?
Where in Slovenia? I was thinking of maybe Slovenia or north Italy. My future wife is Hungarian.
Wise words Sven, enjoyed the video. Looking forward to the newsletter, especially as it’s free!
Good info on bonds, I had not thought about inflation and bonds.
But on 30 year mortgage first 10 years bulk of payments are mostly interest only .
Here in US most people sell within 10 years so it restarts the new mortgage .
15 year mortgage works best in my opinion
If inflation goes out of hand won't that destroy the economy and cause stocks to go down?
Hello, Sven!
What you think about Value investing for companies like Ryder System, Inc. (NYSE: R)?
Very good 5-years statistics but very large Total Debt (8 years by Income) and quite big minus in Cash Flow.
just closed my mortgage yesterday at 1.67 % fixed
So you pick Slovenia? Good choice! I was personally thinking about going to Croatia to retire once my portfolio reaches a critical point, but Slovenia isn't out of the question.
Slavic Mediterranean ftw!
About Slovenia: they have euros so if you open a company in the Netherlands you might be able to ask financing from a local bank and use their rates to buy in slovenia. Or not really?
Also about mortgages: from my understanding (probably from Shiller) rates are inversely proportional to prices in real estate, but yield are pretty constant (after considering inflation).
Translated:
low rates=high prices + low prices=high rates = same same.
You buy a cheap house with expensive money or an expensive house with cheap money but the long term result or trend is the same.
I might have misinterpreted. So I'm open for debate.
Great that you cover so many topics. Learning a lot from you Sven!
Here in Venezuela people used to pay at the end 100k$ for 1M$ houses thanks to inflation. But now the problem is that banks are not giving credits, I was too young to take advantage of that when the oportunity was there =(
Hey Sven, I love the videos. I like your current direction of bringing visibility to gold and inflation risks. I’m wondering if you can consider making a video where you discuss how the average investor can invest diversely in commodities. Dalio’s All Weather suggests a commodity position. I haven’t seen many popular, diverse commodity ETFs. I’m wondering your tips and strategies on getting into commodities
But you have to pay the mortgage. If there is a liquidity crises then you may not be able to pay and then lose the house.
I love that you mention buying government bonds when inflation and interest rates were very high. It's a really good thing to keep in the back of your mind for whenever it happens again. It's good to know what to do in current market conditions but it's better to know what to do when those conditions change in my opinion.
In my opinion Buffet was taking a bet on the 15% Bonds. Inflation could have hyperinflated like in Venezuela
Sven, what do you think about hedging the stocks with LT Treasuries?
I don't want to hold bonds for the long term, but for hedging they seem to be interesting.
Ray Dalio holds in his All-Weather-Portfolio 40% in LT-Treasury-Bonds to balance the risk in the stocks!
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