Ways to Protect your Investments from the Effects of Inflation

Saving money and investing is always considered a smart move. However, because of this little pesky thing called inflation, the actual worth of our savings and investments may diminish over time. The higher the inflation, the more money we lose, and many think that there is no way to avoid this problem. That is why so many experts always look at what is an actual return on our investment, accounting for the net value and inflation.

Furthermore, even when we plan ahead for inflation, it is impossible to predict how and will inflation rise in the future. That means that we might lose even more money than what we projected when making our financial decisions. So if you are someone who would like to stay in touch with the latest news and ways to earn more money, you should definitely check out knowtechie.com, but if you would like to learn more about ways to protect your investments from the effects of inflation, we will further discuss this topic and provide advice.

Long-term mutual funds

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While investments may lose us money over time due to inflation, as long as we invest over a long time inequities, we should be one step ahead of our nemesis. With a good equity mutual fund, we can earn ten percent more than what inflation takes. A straightforward approach is also a possibility, of course, but mutual funds are a much safer option for most of us. After all, it’s not us who are big players or specialists in this field, but mutual funds are for sure run by those. Kailash Concepts, a Quantamental investing company, also mentioned these in their recent Great Inflation and Equity duration white paper. Visit their website to learn more about Equity duration.

Having various investments in several mutual funds gives us an opportunity to earn even more money, along with covering potential losses. Again, the key here is to find a fund that is about long-term investments, more than just a few years long. The biggest advantage of mutual funds is advisors that lead them. If you are already a financial expert with plenty of time at your disposal, then you don’t need them. Otherwise, their assistance is crucial in finding the best possible opportunities. And while they might not always predict the best possible investment, they certainly can do a great job. It might be a leap of faith for some to put their trust in someone else, but that is a leap that we need to take.

Purchasing gold or real estates

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Stocks are unquestionably the first thing that comes to our mind when we think of investments. But some of the more old-fashioned thinking might be more resilient to inflation. Buying real estate or gold is always a solid decision. While it depends on where you live precisely, generally speaking, the price of housing is on the rise for decades now. There was a crisis for a while, but now everything is back on the upward track.

The value of real estate tends to either do a great job of following the inflation or is actually higher, and the same goes for rents, as they also tend to rise almost everywhere. Unless you live in a city with some rent control, investing in real estate can be profitable. There is also a real estate investment trust that is perhaps perfect for some. When it comes to gold, this asset is recognizable because it can be immune to inflation. With some bonds, it is easy to buy them. In this modern-day era, we don’t have to buy gold and check its value with our bare hands and eyes, as this is also done with the help of professional institutions, meaning that risks are minimal.

Investing in stocks and dividends

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We mentioned that purchasing stocks is the most common way to invest our hard-earned money. But to be more precise, to keep inflation at bay, it is best to buy stocks with great dividends, and once again, don’t forget to think about the actual return on our dividends, the one that takes inflation into the calculation. What is the number that we care about the most is the dividend yield number.

That is the one that will tell us is that stock worth of investments, or will the inflation most likely defeat the purpose of our initial investment. Another great idea is to invest in companies that are incredibly flexible when it comes to opposing inflation. Those that sell resources necessary for society to function can even see incredible rises during inflation times. Think staple foods that or something on those lines, and not luxurious products. Those tend to be less relevant during troubling times that bring inflation with them.

Cryptocurrency is the future

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And last but not least, consider investing in cryptocurrency. If we can draw any financial conclusion during these troublesome times, it is about cryptocurrency as something that will shape our future. If you are asking yourself which one is the best one to buy, that would be a different topic. But long story short, going with the most popular ones like Bitcoin or Ethereum is always a good idea.

The growth that they are capable of achieving is something that inflation can’t ever come close to. In fact, when it comes to investing in crypto, inflation stops being an issue altogether. The million-dollar question is which currency to buy, how long to hold it, and when to sell. That is why learning more about this world is essential before you can add some of the cryptocurrencies to your portfolio. But if you have the time to do just that, there is no reason to regret that decision.

The bottom line

As we have seen, inflation can be quite a problem. It is not a coincidence that some people refer to it as the worst tax. Luckily for us, there are ways to stay ahead of it. Anyone following our advice should have no trouble protecting their investments from the effects of inflation. The key here is to think long-term, diversify your portfolio, and at the same time stay true to both traditional values and try out something new.