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How To Protect Yourself And Your Assets Against Inflation

How To Protect Yourself And Your Assets Against Inflation

September 27, 2022

As the year has progressed, the United States is still in an inflation crisis. This is not new; the U.S. economy routinely has its periods of inflation and deflation. Since the economy goes through these cycles, it’s important to keep yourself and your assets protected against inflation. Continue reading to learn several inflation protection strategies for your finances.

Invest In Real Estate

Real estate is a great investment vehicle since the value of property can still increase during times of higher inflation. As a landlord, you can charge more for rent to keep your income on pace with inflation.

If you are not interested in buying property but still want to utilize real estate in your investments, REITs are an option for you. REIT stands for Real Estate Investment Trusts, which are private companies that own and operate income-producing real estate. These private companies are invested through the stock market but generate income from the rent paid on the properties they own, which include residential and commercial real estate. The same rule of real estate applies with REITs; as inflation rises, rents can be raised, increasing the income of those properties.

Invest In Stocks

Stocks are historically known to be great at resisting inflation. As a response to inflation, businesses need to sell their goods at a higher price, increasing revenue, earnings, and stock prices. The best stocks to own during inflation rises are companies that can naturally increase their prices, such as gas, oil, or metal companies. It is important to keep in mind that commodities can be highly volatile. For this reason, it’s important to keep a well-balanced stock portfolio so your portfolio still increases in value as each industry's stock changes.

Invest In Short-Term Bonds

Short-term bonds allow you to keep your funds safe and accessible. An increase in inflation leads to an increase in interest rates. Having a short-term bond allows your investment to be affected less by interest rates than long-term bonds.

Utilize Other Accounts For Your Cash

Keeping only cash on hand will lower your buying power when inflation is on the rise. Instead, utilize high-yield savings accounts, money market accounts, or certificate of deposit accounts to keep on pace with inflation. Each of these accounts have annual returns that can continue to grow your funds beyond the inflation rate.

While inflation has its surges and falls, it’s important to keep your finances protected from inflation. If you are having trouble protecting yourself and your assets against inflation, our advisors at Lifebridge Financial Group are here to assist. Schedule a consultation with us today to get started.