For most people, high inflation levels are a time for worry and stress as their purchasing power decreases more than usual. Yet, there are opportunities present to mitigate the negative impacts that sky-high inflation levels bring. In this article, the experts at Riz International, best known for mentoring thousands of stocks and options traders across the globe provide 3 ways by which to plan your investment strategy during a high inflation environment.
Investors seeking capital preservation and purchasing power stability should take a look at TIPS (Treasury Inflation Protected Securities). TIPS holders can enjoy confidence that they’ll get their principal back, given that TIPS are backed by the full faith and credit of the U.S. government, and they rise steadily alongside inflation. They also keep those that are very risk averse away from the volatility that financial markets pose. However, for the experts at Riz International, higher than usual inflation is a time that calls for being more aggressive with capital preservation. They personally prefer other modes of investing, but fixed-rate investments definitely have a role to play for someone with no risk tolerance.
Blue–Chip Equity Investments
According to the experts at Riz International, “Blue Chip Equities (solid large companies that have been around for decades) are your safest bet when it comes to tackling inflation. Over the long run, they often end up growing far beyond levels of inflation and are a fantastic way of growing wealth. Here’s what happens – as most people know, inflation leads to a rise in products and services that a companyprovides. For most people, this is where the situation evaluation ends. But what they don’t realize is that when the prices go up, so can its revenues and profits (oil companies for example). This means a great company that has a competitive advantage and a handle on its costs has the potential to expandits profit margins, and as a result, the investors who own the company stock eventually see that expressed in the growth of the stock price in the long term.” Now, if that’s not a win-winsituation, we don’t know what is.
Real Estate Investment Trusts
Real Estate Investment Trusts (REIT’s) are a fantastic way to get direct exposure to the real estate sector but without having to put up large amounts of capital, get a mortgage, and/or worry about finding tenants. “Publicly traded REIT’s trade just like any other company on the stock market and allow investors to receive dividends (usually quarterly). There are all manner of REIT’s out there and not all are great (highest dividend is not always better) and knowing which ones to buy and which ones to avoid is of course the most important part, but generally speaking, REIT’s provide investors with liquidity and flexibility while providing higher dividend yields than the vast majority of blue-chip stocks” say the experts at Riz International.
For those that remain proactive, a period of high inflation is also a time of taking stock of their financial situation. Experts at Riz International have this to say, “Inflation is a vital part of the economy, but like anything else, if it goes too far out of range, it becomes a bad thing. To excessively stress about something that is far beyond the control of anyone only further puts us on the back foot. Instead, think of investing in things like TIPS, REIT’s and Blue-Chip Stocks as a way to not only combat inflation, but also grow your wealth.”
Thanks to these tips by Riz International, now you can beat inflation at its own game.