Inflation Proof Investments: 6 Ways to Brace Your Investments

Daniel Penzing
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With the COVID-19 pandemic causing economies to falter, now is the time to brace for inflation.

This was always a likely event, and the next few months show that there is no slowing the curve. In fact, it could double or triple in the short term without a doubt. The basics of surviving an inflationary period are pretty straight forward. We have gone to the basics to make sure you know what to do:

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Steps to survive an inflationary period:

Begin stocking your pantry. This is the simplest step to take, but the most effective. This includes food items that you use regularly. Eggs, veggies, and meat are great forms of food to make sure you always have. Of course, it is prudent to have a supply of freeze-dried foods in your pantry as well. That way you don’t have to worry as much about having the energy to make your own meals.

Inflation Proof Investments

6 Ways to Brace Your Investments

When we buy items, they are more likely to decrease in value than increase. So it doesn't make sense to keep your money at home in a jar or under the mattress. Especially if you are in the middle of working on your own future. Right?

Investing your money is the most common approach people take to erect a building for their future. Investing is a natural way to grow wealth. It is the only way to get something back out of your money.

Investing is quite simple too, you just have to stick to a few rules. You can easily search online for different investment strategies that will be useful to you later in life. Investing your money today is useful so as to earn money tomorrow.

However, even after years of research into the field of investments, no one has been able to come up with a way to invest so that you are guaranteed to earn profits. There is no investment solution that is best for every situation, and investors have to be careful and attentive in order to make smart decisions that play by the rules in the market.

Inflation Is Usually Kind to Real Estate

With the cost of living on the rise, the fight to save money gets tougher every day. Inflation affects each and every one of us, but as you know, it is not the same for everything. Some inflation is outright bad because some items get more expensive, however others go up in value. That is where you can make a huge difference.

What was a solid investment in 2015 may be a poor one in 2028. So investing wisely is really the only key to making sure that your investments are inflation proof.

Wealth is a very relative term. If I was to ask you what it means to be rich, you probably could not answer. It depends entirely on the manner in which you live your life.

Obviously, if you live in a mansion and then I ask you if you are rich, you would probably say no. On the other hand a person who lives year after year in poverty may feel pretty rich.

So real estate investing is all about finding the right balance. It is managing your diverting attaining wealth in a manner that you will still live with when you are old.

Here are 6 ways to invest in real estate that will not only help you make more money, but they will also allow you to sleep at night knowing that when you do pass, your family will be taken care of.

Instead of paying rent every month, you can cut that out and own the place.

Keep Cash in Money Market Funds or TIPS

This is not so much an investment as it is a clever use of your cash which will protect your investments without a great deal of effort, and also grow slowly. Because of that – your investments will grow slowly. But if your short term goal is to keep your money liquid – cash may be the place for you. It’s easy to liquidate cash and spend it at that exact moment.

Money Market funds also offer high interest rates.

When you invest in a money market fund, your money is shared among many different companies. Each company’s share (or stock) is equally divvied up among the investors in the fund and the amount of shares owned is how investors raise their total money market fund weight. So the more money you invest, the more money you are invested in each company. The idea is that when one company does better than the other companies in the fund, your money will be invested more in that company and vice versa. When the market does well, it does repeatedly, and you are all on a “float”.

Because each company can be trusted to pay off their bills each month and the funds will be invested in a variety of solid companies, it is a good investment if your short-term goal is liquidity.

How to buy TIPS

To brace your investment portfolio?

The 10-Year TIPS is probably one of the best ways to set as an inflation proof investment. It has a top-up feature and its maturity date is 10 years away. Moreover, the features of this type of security are that it is issued with a maturity of a yield of a minimum 2% below the rate of inflation. It is a common form of government bond which has that fixed interest rate for a period of 10 years. That period is referred to as its duration period. One more feature of the 10-Year TIPS is the increase in the Treasury bond and a decrease in yield. You can observe the 10-Year TIPS at the Treasury.gov .

The buying procedures for TIPS acts like a bank deposit and IRA. It is an open market purchase where an investor can get the maximum benefit out of it. It is not an investment which is sold product and can be organized in any amount. The amount of security you will have bought will be the residual amount for ten years of securities.

The benefits of the TIPS for the investor in all the monetary stability is the important benefit that is being considered the TIPS. The stability in the economy is given by the TIPS because of its soundness. Moreover, if you have a TIPS then the amount of money you have invested into these certificates is guaranteed by the government. Consequently, you can put away some of these benefits in the hard times.

Avoid Long-Term Fixed-Income Investments

Long-term fixed-income investments will most likely not perform very well in the future. The interest rates are just too low. How can the government solve it? They would try to inflate some more money. But if they do that, it just destroys all of your cost-basis in your investment products. The 2% that you would have made on a CD may end up being worth half of the value of your original investment.

Emphasize Growth in Equity Investments

Get off your fixed income investments even for just a few years

Commodities tend to Shine During Periods of Inflation

Commodities are a proven inflation fighter. This is because many commodities are usually needed to keep economies running smoothly. For example, both gold and silver are used in industry, and food commodities are used for survival.

If inflation starts picking up speed, expect prices on commodities to soar as well. In fact, they’re also quite volatile, which means that taking an interest in commodities can help to balance out your portfolio when the market becomes unpredictable.

If you’re looking into buying commodities, here are some of the most basic commodities to think about investing in:

Government Bonds

Although they are not as volatile as futures contracts or stock options, government bonds act as a good protection against inflation.

When inflation starts to pick up, the interest rates that are offered rise as well. As a result, the demand for government bonds also goes up, and their prices also tend to rise. This is because investors assume that they will get a positive return on their investment.

So investing in government bonds as a protection against inflation is definitely a good idea. In fact, many analysts have even said that you should hold some government bonds as well as cash and bills for a complete portfolio.

Owning gold and silver is always a good idea as an investment. Gold is often a good option to hold when you expect the economy to do better.

Convert Adjustable-Rate Debt to Fixed-Rate

One of the easiest ways to make your investments both deflation-proof and inflation-proof is to stick with a fixed-rate loan. One of the pitfalls of adjustable rate loans, such as mortgages, is the temptation to adjust your rate down as interest rates fall, because the lender is willing to give you a lower rate.

However, if rates continue to fall and stay low, you will be stuck with a lower rate for the life of the loan. It is better to lock in the rate of your adjustable rate loan and pay off the loan sooner with a fixed rate loan.

By paying off the loan before it adjusts, you eliminate your risk of being stuck with an unfavorable rate.

However, if you are unable to pay off the adjustable rate loan quickly in this situation, paying off a shorter-term adjustable loan is also a viable option in order to avoid the risk of having to pay higher future rates.

Prepping Your Portfolio for Inflation

As a part of some investment, one of the questions that always comes up is whether the asset is inflation proof. Besides some small exceptions, everything will be affected by inflation, so how can you be ready for it. When you are investing for a retirement, it is always good to have a good idea of what is going to happen to the value of the investment over time. The reason for this is to be able to be prepared for any change in the initial investment made, this can be an increase or a loss in the value of the investment.

The reason it is important to be prepared is that if you are not, when you want to sell, and inflation is high, the value of the money you would have received would be less than the money originally invested.

If you are going to start investing in the stock market, you will need to have a good idea of how the market works and what the trends are, to decide the correct time at which to invest.

You will also need to answer the question of whether inflation is going to affect your investment to be able to track the eventual returns on the money you invested.

Here are six ways that you can brace your investment for inflation to make sure that it doesn’t affect your investment returns.