When investing, most realise that inflation can kill the returns of the portfolio of an individual investor. Unfortunately, it is often difficult for one to avoid this problem. However, when researching one’s options, a person can find a way to fight against inflation. Here are five tips for an individual investor who wants to keep ahead of inflation and beat the markets.
Commodities: When putting money in gold or silver, one will do their best to fight inflation. In fact, when inflation rears its ugly head, most commodities will skyrocket. In recent times, plenty of big name traders who expect inflation to return, are putting their money into metals and oil. Remember, commodities offer an investor serious protection against rising prices for goods and services around the country and the world.
Property: Now, property does not experience daily price swings that people can easily follow and understand. However, it is an excellent hedge against inflation. As prices rise, people usually seek protection in assets that offer stability. Without a doubt, a house is the perfect place to park investment dollars when prices are rising for everyday goods. Property will remain a solid long-term investment as long as interest rates stay low and the threat of inflation exists.
Treasury Inflation-Protected Securities: With TIPS, one will beat inflation. In fact, the yield of the bond increases as inflation rises. Fortunately, one does not have to buy TIPS directly from the US government. There are plenty of ETFs that offer the buyer a chance to get in on the action without buying bonds. Remember, when searching for a solid and reliable way to beat inflation, TIPS are the best investment when one seeks security and safety.
Dividend stocks: When buying dividend paying stocks, one will enjoy a solid ROI. This is an excellent way for a small investor to gain solid returns in time of high inflation. In reality, when one can find a dividend paying stock offering a four or five per cent yield, he or she should jump on it and buy a few shares using a stock trading account like that offered by AXA Self Investor. The great thing about buying dividend stocks is that as time goes on, one will enjoy an asset that should appreciate well all while offering a decent yield.
Resource companies: When buying stock in resource companies, one can beat inflation and enjoy a nice return on their stock purchase. Many resource companies hold large portfolios of land covered in timber or natural gas. With ownership in these companies, one can own a solid asset that should continue to appreciate even in tough times. Without a doubt, this is the perfect way for a small investor to invest in a resource that they could not invest in on their own.
In times of high inflation, one can see their investments suffer. Luckily, when a small time investor prepares for this, they can enjoy solid returns on their investments. In fact, many smart traders have taken advantage of these times and ended up beating the market.