What is a worrying is the US Fed have officially announced that they are happy for inflation to go beyond its 2% target before it raises interest rates. Therefore, does the FED believe inflation is around the corner? Higher growth can lead to higher inflation due to less spare capacity, so prices rise as firms compete to attract additional labour and goods. However, just because you allow higher inflation this does not mean you will get higher levels of economic growth!
There are two schools of thought – Given the gargantuan amount of money that has flooded the global economy inflation is ripe to accelerate or now with a recession looming and rising unemployment inflation is the least of our worries.
Globalisation unleashed massive deflationary pressures but as the era of hyper globalisation comes to an end, also there is less scope to cut costs by moving production ‘overseas’ as labour rates globally have risen.
“Warren Buffet once said inflation is a far more devastating tax than anything that has been enacted by our legislature. The inflation tax has the fantastic ability to consume capital.” While inflation is a killer for those on fixed incomes, as the value of the cash in your pocket declines, inflation is fantastic for those with debt, as over time it becomes easier to service/repay the debt. Given governments are the biggest debtors it is easy to see why governments do not target 0% inflation.
Real assets such as equities and property have proved to be a good way to inflation proof your capital during periods of high inflation.
However, given the current heady valuations and very concentrated exposure to a handful of tech stocks such as Amazon, Apple, Facebook, Google and Microsoft index equity fund may not prove to be the best place to invest. If should inflation makes a comeback
interest rates are likely to rise, and the majority of quoted companies have massive debt piles, in part due to their stock buy back programs. Indeed, all of the afore mentioned companies above apart from Facebook are in NET DEBT as there are only 15 companies in the S&P 500 that are cash positive
Index linked gilts are a sure way to ensure that your capital maintains pace with inflation as the returns are directly linked to the rate of inflation.
There are an increasing number of Crypto fans such as Bitcoin citing this alternative asset, calling it digital gold as being free from central manipulation and the number of Bitcoins are limited to 21 million. But what about the hard forks?
One of the oldest homes for investors in times of trouble is GOLD and it would seem that one of the most successful investors in modern times Warren Buffet has decided now is the time get more exposure to the ‘yellow stuff’, despite for years having said he was not a fan of investing in gold. Buffet’s investment company, Berkshire Hathaway, has just bought a stake in Barrick Gold – Africa’s biggest gold miner. While buying gold Buffet has reduced many of his bank stocks such as Goldman, JP Morgan, Wells Fargo and sold all of his airline stocks.
Although as with all investments there are naysayers highlighting the $564million Barrick stake is tiny compared to Berkshire Hathaway’s $500billion capitalisation. Nevertheless, is Buffet’s gold purchase and dumping of banks a sign he is positioning ready for a weak us $, rising inflation and rising interest rates which would be disastrous for equities?
The above are not investment recommendations and one needs to take professional before making investments
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HOW TO: Hedge Against Inflation

REVEALED: Best Investment During Inflation

HOW TO INVEST IN GOLD: Gold IRA Investing

HOW TO INVEST IN SILVER: Silver IRA Investing

As the Federal Reserve recently signaled its willingness to let inflation run beyond its previous 2% target, many individuals and businesses are understandably concerned about the potential for rising prices and decreased purchasing power. Inflation can erode the value of savings and investments, making it crucial for people to take proactive steps to protect against its effects. Here are some possible ways to safeguard against inflation in the face of the Fed’s sanctions.

1. Diversify Your Investment Portfolio
One of the most effective ways to protect against inflation is to diversify your investment portfolio. This means spreading your investments across a variety of asset classes, such as stocks, bonds, real estate, and commodities. By diversifying, you can mitigate the impact of inflation on any one particular asset and increase the likelihood of overall portfolio growth.

2. Invest in Inflation-Protected Assets
Inflation-protected assets, such as Treasury Inflation-Protected Securities (TIPS) and inflation-linked bonds, are specifically designed to guard against inflation. These investments provide a hedge against rising prices by adjusting their value in response to changes in inflation. Allocating a portion of your portfolio to these assets can help offset the negative effects of inflation on your overall investment returns.

3. Consider Real Assets
Real assets, such as real estate and commodities, have historically acted as a hedge against inflation. Real estate investments, for example, tend to appreciate in value over time, keeping pace with or even outpacing inflation. Similarly, commodities like gold and silver have a long-standing reputation as inflation-resistant stores of value. Including these types of assets in your investment strategy can help protect your wealth from the erosive effects of inflation.

4. Review Your Debt Structure
Inflation can erode the real value of debt, making it potentially advantageous to hold fixed-rate debt in an inflationary environment. If inflation rises, the value of the debt you owe will decline in real terms, effectively reducing your debt burden. On the other hand, variable-rate debt, such as adjustable-rate mortgages, can become more costly as interest rates rise in response to inflation. Reviewing and potentially restructuring your debt to take advantage of its impact on borrowing costs can be a strategic move in a higher inflation environment.

5. Maintain a Balanced Cash Position
While it’s important to protect against inflation, it’s also essential to maintain a balanced cash position. In an inflationary environment, the purchasing power of cash diminishes, so holding too much in cash can erode your wealth over time. However, having some cash on hand is also important for flexibility, liquidity, and emergencies. Striking a balance between protecting against inflation and maintaining access to cash is crucial for a well-rounded financial plan.

In conclusion, the Fed’s recent sanctioning of higher inflation has prompted many individuals and businesses to consider ways to protect against the potential erosion of their purchasing power. By diversifying investment portfolios, investing in inflation-protected assets, considering real assets, reviewing debt structures, and maintaining a balanced cash position, individuals can proactively safeguard their wealth in the face of rising inflation. As always, it’s essential to consult with a financial advisor to tailor these strategies to your specific financial situation and goals.