How Do You Invest When Inflation Rises?

Just as the value of the property rises with inflation, the amount tenants pay in rent can increase over time.

These increases let the owner generate income through an investment property and helps them keep pace with the general rise in prices across the economy.

How do you invest when inflation increases?

Here are six ways to brace your investments for this situation.

  • Keep Cash in Money Market Funds or TIPS.
  • Avoid Long-term Fixed Income Investments.
  • Emphasize Growth in Equity Investments.
  • Commodities Tend to Shine with Inflation.
  • Inflation is Usually Kind to Real Estate.
  • Convert Adjustable-Rate Debt to Fixed-Rate.

How does inflation affect investment?

Most investors aim to increase their long-term purchasing power. Inflation puts this goal at risk because investment returns must first keep up with the rate of inflation in order to increase real purchasing power. In much the same way, rising inflation erodes the value of the principal on fixed income securities.

How do you hedge inflation with investment?

The Top 5 Ways to Hedge Against Inflation

  1. Look to REITs: Real estate investment trusts (REITs) carry holdings in commercial, residential and industrial real estate and often pay higher yields than bonds.
  2. Look to TIPS: Treasury inflation-protected securities (TIPS) are designed to increase in value in order to keep pace with inflation.

What should you do against inflation?

Here are just some of the ways that you can put on your game face and fight against inflation:

  • Invest in Goods or Commodities, Not Money:
  • Get a Strong Support Group:
  • Grow Your Own Food:
  • Save Electricity and Energy:
  • Buy in Bulk:
  • Trade in Your SUV:
  • Ask for a Raise:
  • Earn Extra Cash on the Side: