Five simple ways to hedge against inflation

  • Periods of excessive inflation have happened numerous times throughout U.S. history.
  • Gold and Silver have historically held value, even climbing during most periods of inflation.
  • Keeping money in a savings account during periods of high inflation actually taxes your money.
  • Cash generally loses value during periods of inflation.
  • Keep investments diverse during times of rising inflation.
  • Stock up on essential items that might cost more in the near future.

Supply and demand is something that mankind has tried to balance since the dawn of civilization.

Thousands of years of past economic data can be used as an amazing reference as to the type of commodities that perform well during economic downturns. After spending quite some time researching I was able to come up with 5 simple ways to protect wealth during a period of inflation.

1. Gold and Silver

The world has used gold as a form of currency in one way or another since approximately 550 b.c. As the old addage goes an ounce of gold can typically buy a tailored suit regardless of the time in history. While gold has experienced it’s own market cycles, owning some is almost always a safe bet.

2. Avoid standard saving accounts

During periods of high inflation keeping money in standard saving accounts is unfortunately not the route to go. With elementary math we can see that by “saving” your actually losing money every year. If inflation is five percent and the bank is promising two percent annual interest on a savings account, it’s easy to see that this money has had a 3 percent tax applied to it in a stelath manner.

3. Not too much cash

This one is fairly self explanatory as well. During periods of excessive inflation the purchasing power of money decreases at rates faster than wages increase. Always keep cash on hand but be mindful of the amounts.

4. Diversify Investments

Keeping diverse investments (including real estate if possible) is a good form of wealth protection regardless of the economic market. During periods of inflation the price of stocks can also rise as more money floods the market. This also protects cash from the hidden inflation tax.

5. Stock up on essentials

Once you have your financial well-being protected it might be a good time to think about stocking up on several months worth of groceries and supplies. The type of items that you would typically use anyways. Grocery and home improvement stores are usually the first place a person would actually notice inflation at the cash register.

Now you know 5 simple ways to protect yourself against periods of excessive inflation.

Enjoying our content? Check out another article- Accelerated inflation could be an unintended consequence of 2020’s stimulus package

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