The Fed announced we can expect to see inflation in the years to come. We will discuss what this means for the market and the ways we can protect ourselves from inflation.

0:00 – Federal Reserve and inflation increase
1:17 – Stagflation of the 1970s
2:08 – What to expect next in the economy?
3:00 – Ways to hedge against inflation
3:35 – Barrick Gold
4:21 – Commodity ETFs
4:38 – Conservative portfolio approach
5:10 – Cryptocurrency
6:36 – Treasury Inflation Protected Securities (TIPS)

Traditionally assets are a great way to hedge against inflation. As inflation occurs in the economy the value of assets will rise. However, with the current market uncertainties, here are 5 alternative ways to hedge against inflation:

1. Barrick Gold

2. Commodity ETFs

3. Conservative portfolio approach – consider adding a few bond ETFs to your portfolio. Here are a few I recommend:

BLV- Vanguard Long-Term Bond Index Fund ETF Shares

BIV – Vanguard Intermediate-Term Bond Index Fund ETF Shares

4. Cryptocurrency – my favorite site for buying cryptocurrency (Americans):

Outside of United States:

5. Treasury Inflation Protected Securities (TIPS) – below is an iShare ETF I recommend adding to your portfolio:

TIP – iShares TIPS Bond ETF
…(read more)

HOW TO: Hedge Against Inflation

REVEALED: Best Investment During Inflation

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How to Hedge Against Inflation?

Inflation is a persistent rise in prices of goods and services over time, eroding the purchasing power of your money. It is an inevitable part of a growing economy but can have adverse effects on individuals’ financial stability. To protect your wealth and maintain its value in the face of inflation, it is crucial to employ strategies that allow you to hedge against this economic phenomenon. Here are a few effective ways to safeguard your finances from the impact of inflation.

Invest in Real Assets:
One of the most reliable ways to hedge against inflation is by investing in real assets. Real assets are tangible assets such as real estate, gold, and commodities that tend to appreciate in value during inflationary periods. Properties, in particular, have historically proven to outpace inflation rates, making them a popular choice for investors seeking long-term protection against rising prices. Diversification across real assets can provide a buffer against inflation, as different assets may perform better in certain economic conditions.

Diversify Your Investment Portfolio:
Another effective strategy to hedge against inflation is to diversify your investment portfolio. Invest in a range of asset classes, such as stocks, bonds, mutual funds, and exchange-traded funds (ETFs), to spread your risk. While inflation often negatively impacts certain sectors, it may positively affect others. For instance, during inflationary periods, stocks of companies operating in industries such as energy, commodities, and utilities tend to perform well. By diversifying your holdings, you can take advantage of potential gains in sectors that are better suited to withstand inflationary pressures.

Consider Treasury Inflation-Protected Securities (TIPS):
Treasury Inflation-Protected Securities (TIPS) are government bonds designed explicitly to protect against inflation. Unlike traditional bonds, TIPS’ principal value adjusts based on changes in the Consumer Price Index (CPI), a commonly-used measure of inflation. As inflation rises, the principal value of TIPS increases, effectively maintaining the bondholder’s purchasing power. In addition, TIPS provide regular interest payments, shielding investors from the adverse effects of inflation on their income.

Invest in High-Yield Stocks and Dividend-Paying Companies:
High-yield stocks and dividend-paying companies can also serve as effective hedges against inflation. These types of investments offer a steady stream of income regardless of underlying market conditions. Dividend payments typically increase over time, helping to combat the erosion of purchasing power caused by inflation. When selecting such stocks, it is essential to conduct thorough research on the company’s financial health, dividend history, and growth potential.

Consider Short-Term Investment Options:
During periods of high inflation, cash holdings can quickly lose their value. Consider investing in short-term, fixed-income securities like certificates of deposits (CDs) or money market funds. These instruments often provide a slightly higher interest rate than traditional savings accounts and can help preserve your wealth. However, be mindful of potential early withdrawal penalties and ensure the institutions holding these investments are reputable and insured.

Monitor Price Movements and Adjust Your Strategy:
Lastly, staying informed about inflation trends and regularly reviewing your financial strategy is crucial. Monitor key economic indicators, such as inflation rates, interest rates, and government policies, as they can significantly impact your investments. Adjust your portfolio periodically to align with the changing economic landscape, ensuring your investment choices remain resilient against inflation.

While no strategy can completely eliminate the impact of inflation, taking proactive measures to hedge against it can help protect your wealth and guard against its erosive effects. By diversifying your investments, investing in real assets, considering TIPS, selecting high-yield stocks or dividend-paying companies, and monitoring price movements, you can prepare yourself financially to navigate inflationary periods successfully.