The inflation rate in the United States has been on a steady rise for the past few years. In 2015, the rate was at 0.2%, gradually increasing. In 2017, the rate was at 1.5% and 2% in 2018. However, this year, inflation rates skyrocketed, reaching a staggering 8% and rising.
Every investor knows that a high inflation rate means lower purchasing power. This results in a loss of money and makes people think twice about spending. The same goes for businesses, as they will have to increase their prices to keep up with inflation, which can turn customers away.
It also means that investments are worth less in real terms. This is because when prices rise, the value of each dollar falls. So to keep up with inflation, you need to invest in assets that will increase in value at a rate higher than inflation.
However, some investments will perform better than others. Here are four great investment options at a time with high inflation rates.
Gold
Gold is considered to be a safe haven asset. This is because it has a long history of maintaining value in times of economic turmoil. Gold is also relatively scarce, which makes it a valuable commodity.
When inflation rates are high, the price of gold usually goes up. This is because investors flock to gold as a safe investment option. Gold is also used as a hedge against inflation, as it tends to increase in value when inflation rates are high.
Investing in gold can be done through Exchange-Traded Funds (ETFs). These track and trade gold on stock exchanges.
You can also invest in gold mining companies, which will benefit from the higher prices of gold.
Real Estate
Homes are rising in price because of inflation. This year, the average cost of a home is over $400,000, but don’t let this dissuade you from looking into real estate as an investment.
Rising inflation rates can be a good thing for investors in the real estate market. This is because when inflation rates are high, rents usually go up. This means that investors in the real estate market can potentially make a lot of money if they own rental properties.
Another benefit of investing in real estate is that it is a physical asset. This means that it is not as volatile as stocks and other investments. Real estate is also a long-term investment, which can provide stability in times of economic turmoil.
If you want to start investing in real estate, you’ll need a professional to help you out. A reputable mortgage company can help you find a property that fits your budget and needs. They can also give you the right rate during these times when rates run high. Additionally, they can provide you with access to refinancing and other loans that can help you during tough times.
Bonds
Bonds are another excellent investment option during times of high inflation, and it’s because bonds are loan agreements between an investor and a borrower. The borrower agrees to repay the loan, plus interest, over time.
When inflation rates are high, the interest rates on bonds usually go up. This is because the borrower will have to pay back the loan, plus interest, with money worth less in real terms.
Investing in bonds can be done through bond funds. These are mutual funds that invest in a variety of different bonds. Bond funds are a great way to diversify your portfolio and reduce risk.
You can also invest in individual bonds. This is a good option to target specific sectors or companies. For example, you could invest in corporate bonds, which are loans that companies take out from investors.
Bonds can be a great way to protect your money from inflation.
Commodities
Commodities are natural resources that are meant to produce all sorts of products. Investing in commodities can be a great way to hedge against inflation. It’s because commodities tend to increase in value when high inflation rates.
Investing in commodities can be done through commodity funds. These are mutual funds that invest in a variety of different commodities. Commodity funds are a great way to diversify your portfolio and reduce risk.
You can also invest in individual commodities. This is a good option if you want to target specific commodities. For example, you could invest in gold or silver mines.
Commodities can be a great way to protect your money from inflation.
Investing right now might be a severe risk. However, you can make a lot of money when inflation rates go up by picking suitable investment options. These are some of the best investment options for rising inflation rates. So choose wisely and diversify your portfolio to reduce risk.
