Out of all things that an us retired baby boomers and an earning adult with a family to feed dreads, rising inflation is the most terrible in almost all cases. If you have ever talked to a peer or listened to an expert talking about investing your money the right way, you would know how they are most focused on the idea of making safe investments that beat inflation. This is because not every penny you put into something will yield you amazing benefits later in life. In other words, the value of your money will not stay the same in ten years because inflation rates intensely affect that value each year no matter what.
Regardless of where you live and how affluent you bank account is, there is no way you would not want some amazing Inflation beating tips for yourself. While there might be many ways to beat inflation, investing your money the right way tops everything no matter what. Hence, this article is a detailed round up of all those safe investments that beat inflation that you can easily consider for your money settlement in one way or the other and ensure a secure future for yourself and your family.
So, without further ado, let us begin with the most amazing and safe investments that beat inflation:
1- Safe Investments that Beat Inflation – Gold
Overtime, several stones, gems, and metals have enjoyed unprecedented prestige because of how worthy they were or how great they would look. Despite these gems and stones being immense in number and with more and more of these being newly found, the prestige of gold remains unprecedented and superior to all.
Not only gold is comparatively and easier investment, but it also is a great asset when it comes to investing in something that is a great hedge against inflation. Where the prices of several metals and elements have raised and dropped severely over the years, gold has not, even for once disappointed the people who invested in it and kept their investment intact for decades.
Gold is even used in so many regions as an alternate currency and is exchanged in important transactions in place of money too. When inflation rises, the rate of gold is affected in direct proportions. This means when you see things having their rate rising in the market, it is a good time to sell a piece of gold or two if you do not seem to have a way out and bear the rising inflation.
The best part about gold is that, like many others of your investments, gold does not just stay idle. Like gold jewelry, you can occasionally wear it and flaunt it and you will not have to worry about it losing its value ever.
However, if you are investing a hefty sum of money, it is suggested that you invest in other things too while saving a considerable portion of your total investable income in gold that is surely one of the safe investments that beat inflation. You can also have it safely stored for you.
Also, if by any chance you are looking forward to investing in something safe this year, make sure you focus on Inflation news 2021 with special focus on gold rates and value.
2- Safe Investments that Beat Inflation – REITs (Real Estate Investment Trusts)
While it might sound a bit weird to you, but this one is a great option for safe investments that beat inflation. Before we move ahead, let us clear this concept of REITs. Basically, REITs are agencies and brands that own and manage a network of real estates and generate their income from real estate dealing.
Whenever inflation in a region raises, these businesses are benefited because of the rising prices of real estate. Hence, investing in these means you will be directly advantaged by any sort of inflation that happens where the agency has its real estate operating.
It is better to invest in a reputed REIT that has a pool of real estate under its banner. This way, the REIT will earn more and more with rising inflation and will pay out better dividends to all its investors.
However, like almost every other investment that you will make, REITs will also come with some serious implications that are, at times, unavoidable. The biggest of their sensitivities is that most of these trusts are sensitive with the strength of their investors. Whenever inflation rises, many investors step back and the trusts then have to sell most of their owned estate. This means the investors that do not step back are then provided with very minimal dividends regardless of the rising interests rates and prices of the real estate.
Sometimes, REITs have to pay hefty property taxes is some regions and they tend to raise when the inflation rises. This means that every time property taxes increase in your country, you, as an investor with the REITs will have to bear the burnt. You will experience a significant decrease in the dividend share you get, and the trust will try to minimize its loss in terms of the payable taxes by deducting its money from you. Hence, you have to ask an expert at investing and be able to fully understand the depth of real estate matters before you can sign a contract and step in this world as an investor in attempts of making wise and safe investments that beat inflation.
3- Safe Investments that Beat Inflation – Commodities
Another safe option when it comes to inflation beating investments is investing your money in commodities. Now, this one is a broad category and what kind of commodity you choose to invest in depends on the region you live and the amount that you can invest at a given point in time. Talk with a financial expert.
In some countries, the highest yielding investment is grains and crops, in others it is metals. While in most of the developed countries, it is advisable to invest in stocks, emissions, foreign currencies, and other technological equipment.
But before you head on to decide and workout on what kind of commodity is one of the best ways to beat inflation, it is important that you understand the unique and trickly relation that exists between commodities and inflation and how the latter affects the former. The prices of commodities first tell you about the intensity of inflation that is on its way. After the inflation has fully been recognized, the prices of the products that are used in the making of that commodity also increases. This means that once the inflation has rooted itself in your markets, you will surely be having some difficulty even buying the commodity that can later be your safe investment against inflation.
You are lucky if you are considering commodities as your option for safe investments that beat inflation. This is because you can invest in commodities on a broad scale with ETFs or exchange traded funds in other words. This way, not only your investment thrives well, but you are also better able to get better profits out of your investment in the longer run.
But, like all other safe investments that beat inflation, commodities come with their own cons and weaknesses. However, you will not be blown away by these weaknesses of this kind of investment if you are aware of that most of the commodities are volatile and can cause you more loss than harm in trading niches.
Also, you need to be fully able to understand the depth of the demand and supply gap when investing in a commodity so you can make a well calculated and wise decision while investing in a specific commodity.
Lastly, with your money invested in commodities that have their value based on their foreign transaction history, you need to be very careful about the geopolitical tensions. Make sure to keep your eye on the external as well as internal factors that have a role in deciding the value of your commodity and take away your money when you see a harsh risk coming.
4- Safe Investments that Beat Inflation – 60/40 Stock/Bond Portfolio
People will tell you to invest in stocks if you ask them for safe investments that beat inflation. However, your uneasiness with this suggestion is fully understandable considering the intricacies and complexities that a conventional stock investment comes with.
However, you do not have to worry about this since you can always invest in a traditional mixture of 60/40 stock and bond portfolio without having to digest intense details and factual information. For these, you do not have to make this effort of finding the right investment advisor and then pay that person up to help you too.
You can simply trust a portfolio that allocates these bonds and stocks and you won’t have to make this effort of understanding the complexities of such an investment or do any kind of work on your own at all.
To say the least, there is nothing as straightforward, easy, and simple in the world of stocks as a 60-40 stock and bond. However, this ease of it should not be taken as something that makes this particular investment fully risk-free. Rather, it comes with its own risks that are worth mentioning for anyone of you who is looking forward to investing in this inflation beating entity.
If you can compare this type of investment to an all-equity kind of stocks portfolio, you would see how this one will be way weaker than that in the long run. Also, these portfolios tend to bear not very excellent results for very lengthy time periods and require a lot of patience of part of an investor.
However, despite everything, a 60/40 stock and bond portfolio has this ability to hedge against the inflation and this is why it is strongly suggested that you consider giving it a go if your sole purpose behind investing is to keep yourself safe from inflation without having to do a lot of work or putting in so much effort.
5- Real Estate Income
Here comes another well-known and widely tried best way to beat inflation that has been taken up by lot of people and is proven to save people from the harsh effects of inflation and helping them in times of needs.
Real estate is probably the best form of investment that you can earn the fruits of, throughout your life. Real estate requires some effort and high investment for its initial building but you will yourself see the fruits of it once you rent it out and keep it as your long term investment option instead of living in it yourself.
You can simply make as many real estate properties as your budget allows you and can rent those out for a better income generation. They will never disappoint you in times on inflation since you can increase both the rent and the interest rates for the people who would be renting these properties out.
Even if you have to sell your real estate, you can do that without fearing the age of it because its actual price always increases unless the area it is built in has gone through a serious conflictal issue.
However, you can only expect your real estate to work well for you if you are just a landlord and not a resident of it. If the real estate you have invested in is your only shelter too, then there is no way you can expect it to generate you a steady income in times when inflation makes your other sources of income seem less than enough for you.
Make sure to choose a thriving and well-developed place to invest in your real estate and make sure you have all the paper work done with you. This way, you can easily rent it out to the willing parties and can even sell it if need be.
TIP: Maintain a personal finance journal to separate your savings and expenses from your investments, so you can gain better control over your finances.
The article has deeply covered most of the safe investment options to beat inflation. However, the efficacy of these will depend on the region you live in and how well these investment options are doing in your country. Make sure you look at the wider picture and then make a wise decision.
All the best!
This article is intended for informational purposes only. Please consult a financial advisor before making any financial decisions.
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