Can you not help but cringe every time you fill up your gas tank? Are you always caught by surprise every time you buy your favorite bag of chips? Do you shudder when you go shopping for clothes? No matter where you look, almost everything has become pricier, and people are left with no choice but to stretch their already thin budgets.
But what is really the reason behind these soaring prices?
For one, COVID-19 disrupted the supply chain. Most of the things you need or want are still stall. Since there are low supplies, the demand is increased, resulting in higher prices. This, together with other factors, led to a higher inflation rate than it has been in 30 years.
But what is inflation in the first place?
What is Inflation?
Inflation is a term used in economics when referring to when prices rise for different items like gas and groceries. This lowers the dollar’s value, which means that when the prices increase, your money will buy less. The inflation rate pertains to a decrease or increase in percentage in prices throughout a certain period of time.
Ways to Hedge Against Inflation
Since inflation can reach unimaginable heights, it is important to learn how to keep yourself protected from it. Here are some ways you can consider:
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Diversify your investments globally.
Experts always recommend diversifying your investment portfolio. Similarly, it is also best to invest in various economies to help you hedge against inflation. With all the different economies across the world, some of them don’t go through similar economic problems like inflation simultaneously. By adding stocks of economic giants to your investment, you will be able to better diversify your portfolio.
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Try investing in cryptocurrency.
It has become more challenging to hold cash when its value continues to decline. When there are skyrocketing inflation rates, you might want to hold on to decentralized money like Ethereum, Bitcoin, and others. Cryptocurrencies are strong inflation hedges such as real estate and precious metals.
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Invest in some precious metals.
Investing in gold and other types of precious metals is another traditional way to hedge against not just inflation but also economic downtimes. The value of gold, as well as other precious metals, continues to rise. These are appreciating assets that make them ideal investment assets.
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Consider real estate investment.
In general, real estate investments are great investments. During times of inflation, real estate is one of the best investments you can use to hedge against it. When there is inflation, there is an increase in real estate income as well. This is because when inflation rises, property owners can increase rent prices, and as they do so, their income also increases.
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Invest in stocks.
Stock investments are an effective way to hedge against inflation. But just be careful because a rapid spike in inflation may shake the stock market for a while. To lessen the risk, make sure you invest in companies that will likely survive fluctuations in inflation.