How to Protect Your Money From Inflation

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.

How to Protect Your Money From Inflation

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.

3 Simple Ways to Protect Your Money from Inflation

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.

Nippon India ETF Gold BeES: Good vehicle to hike gold exposure - The Hindu  BusinessLine

How to Protect Your Money From Inflation

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