How to Protect Against Inflation

inflation

Rising inflation means I’ll pay more for things, and the money I’ve got parked in a “high-yield” savings account is effectively earning a negative return.

If your portfolio is already set up to reach your goals and hedge against most risks, returns should offset any inflation in the long run.

Ways to Protect Your Portfolio From Inflation

To reduce the impact of high unexpected inflation on your portfolio returns you may consider Inflation-linked Bond ETFs, investing in physical Real Estate, or Equities with business models having the ability to pass on costs.

Certain inflation hedges are obvious. House prices slowly adjust to maintain similar or higher value. This is why having a minor exposure to very reactive assets like Gold or Bitcoin can be useful.

What about Bitcoin and Gold?

Why Bankers Don’t Care About Inflation (For Now)

The key reason why bankers delay rate hikes to slow down inflation is that the accumulated public and private debt is massive and would impact its repayment and thus economic growth.

Why You Should Care About Inflation

- Inflation is a hidden tax.  - One of the things that may not be intuitive is that when you buy a stock or a bond, current inflation expectations are built into the price that you pay.

In needs be very reactive to inflation(provide return) Price reaction must be consistent over time (reacting every time inflation materializes) Have the lowest cost(hedges have an opportunity cost because most assets underperform Equities in the long run and this will drag the performance of your portfolio)

Inflation-Beating Assets

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