newsdesk newsdesk
Related Articles
Rising prices can be too high or too low. When inflation is too high, it places a burden on consumers. People have a harder time buying essential goods and services, like food, gasoline and shelter. When it is too low, it can weaken the economy.
In a perfect world, the Federal Reserve would hit a 2% inflation rate, and the economy would remain stable. The problem is that we don’t live in a perfect world. The coronavirus alone has made the last 1.5 years wildly unpredictable.
The Federal Reserve printed more money. In January 2020, the M2 money supply was $15.41 trillion. In April 2021, it was $20.11 trillion. That’s a 30% increase in the money supply. It also means a decrease in your purchasing power.
You probably have a significant chunk of your investments in traditional assets. Even if you have a diversified portfolio, all these investments are vulnerable to rising prices. It’s the single point of failure.
How do I protect my money when inflation rises?
You can stay the course. High inflation usually doesn’t last more than a year. While your portfolio might take a short-term hit, you can make up the losses over time.
Second, Historically, gold has been the go to hedge against rising prices. Between 1971 and 2019, it has had a more than respectable 10.61% return on investment. While gold may have been your grandpa’s only inflation-resistant investment option, we’ve come a long way since then. Modern investors can put their money in blue-chip art, fine wine, collectibles, cryptocurrency, stamps, cars and jewelry, just to name a few.
