Michael Morris
Wealth of Geeks
Inflation finally dropped in March 2023 to 4.98%, the lowest since April 2021. However, while showing signs of continuing this downward trend, it is still higher than the long-term average, meaning most things are still more expensive than we’d like.
Inflation hits us all where it hurts most: our wallets.
But you can make the most of your money by putting it to work for you with investments. There is a myriad of options out there for making your dollars last, and while it can be difficult to figure out what investment options are right for you, there will always be a choice that works best.
By investing your hard-earned money in multiple places, you are securing a better chance at protecting your money’s value and saving your future self from the strife of financial struggle.
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High yield savings account
High-yield savings accounts are one of the safest places to keep your earnings, and because of high-interest rates, they aid in protecting your money’s value.
These savings accounts are also the lowest-risk option for investors; you always have access to your ever-growing funds.
It’s best to open a high-yield savings account before a large blow to the market or an inflation spike. Since there’s no way to predict that, it’s good to know there is never a wrong time to open one. Just be sure you choose a bank that is FDIC insured to secure guaranteed protection for your funds up to 250,000 dollars.
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Exchange-traded funds
In the same vein as mutual funds, you have exchange-traded funds (ETFs), which handle their holdings in a similar fashion. ETFs are managed professionally, have lower risks, and can access various asset classes.
High liquidity exchange-traded funds have the benefit of the stock market combined with the typically low expense ratio. This adds to the overall allure of investing in them, and if it all gets to be too much, you can always hire advisors to look after your exchange-traded funds for you.
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Treasury Inflation-Protected Securities
Treasury Inflation-Protected Securities (TIPS) fall closely in line with your typical bond. TIPS are designed to mirror inflation and increase the interest rates for each bond when inflation goes on the rise.
These are some of the safest investments you can make because they are government-backed and one of the best types of securities to use to diversify.
Because they are specifically designed to protect you and your investments during times of unforeseen inflation, they are often viewed as one of the easiest investments to start with when considering long-term investments in an effort to combat current inflation.
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Bonds
Bonds are a good way to protect your money in both the long and short term. Experts recommend having a variety of savings bonds, but you can also turn to other short and long-term bonds when attempting to combat inflation.
With short-term bonds, you can keep your money safe and on pace with inflation without withdrawing and holding it in cash. With long-term bonds, you give yourself a worthwhile long-term investment but don’t necessarily have the same level of liquidity that you get with short-term bonds.
I-Bonds are another type of bond that is specifically designed to protect your investments during modern inflation spikes. These are typically the most popular choice in terms of bonds.
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Your own business
Sometimes the best investment is to invest in yourself and start a business. Creating your own company from the ground up and relying on your own capability during times of high inflation is a good way to ensure your money is being put to work.
Starting your own business during tougher times in the market could increase your business’s overall chance of success, as most small businesses struggle to survive during periods of high inflation.
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Real estate
Investing in real estate is considered an expert financial move during high inflation spikes.
Property values generally increase along with inflation, and you have a few options when it comes to real estate investing.
You can look into home ownership, though we recommend waiting until the market is low to buy. Then once inflation rises, sell your home to turn a profit.
However, if you’re looking for a safer and easier option, delving into mutual funds that deal exclusively in real estate investment trusts might be the better option for you.
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Precious metals
Because gold and other precious metals don’t lose their value over time, it’s a good idea to invest in gold for those of you with a long-term horizon.
Investing in gold and precious metals is a classic method for protecting yourself from inflation. Because the overall value and trade value aren’t necessarily impacted by inflation, your gold’s value will keep up over decades.
Like most other investments, it is wiser to buy gold when prices are at their lowest rather than when inflation is at its peak.
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Commodities
Similar to investing in precious metals, you should seriously consider investing in various commodities.
When prices increase, you can turn toward commodities, although they are more commonly used as indicators. However, these investments are known to keep pace with inflation and generally increase in price when inflation rises.
You will find that commodities can also be volatile and should proceed with caution. Experts recommend investing in raw materials, such as metal, oil, and rubber, when other commodities, such as livestock and types of food and drink, go on the rise.
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Mutual funds
Mutual funds are generally a good investment for those of us who are more hands-off about the fate of our stocks and bonds.
However, it’s important to invest in the right mutual fund for you. Choose between four main categories, each with its own separate reports and risks. Even though the safest mutual fund for short-term inflation spikes isn’t a guarantee, it’s still one of the most trusted places to put your money when inflation is on the rise.
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Go with the highs and lows
Investors have one tip to keep in mind every time inflation begins to creep over the horizon. Never buy or sell in a panic.
Keep a level head when dealing with the market and your investments, and use the time to review all of your investments and their performance. Good luck out there, and happy investing!