3 investments to consider with inflation rising
As inflation continues to tick up in spite of a higher interest rates, it may be time to take a second look at your investments. Stocks tumbled Wednesday as updated inflation data dimmed the chances for rate cuts in 2024, demonstrating how rising inflation can threaten your investment assets.
But the truth is, inflation can threaten any savings you have. That is, unless you make moves to protect it.
The current inflation rate is 3.5% and not only will that make borrowing more expensive but it could affect the returns you get with your traditional investments. But, how do you protect your investment portfolio from rising inflation? One way to do so is by investing in assets that generally perform well during inflationary periods.
Invest in gold now to protect your portfolio from mounting inflation.
3 investments to consider with inflation rising
As inflation heads up, your savings could be losing value. Here are three investments that may protect your portfolio:
Gold
Gold is a strong choice among investors who want to protect their portfolios from inflation. As with most commodities, the price of the precious metal is largely determined by the law of supply and demand. When supply outpaces demand, gold's value tends to stagnate or even falls and when demand outpaces supply, gold's price is likely to head up.
That could be good news considering the recent inflation data.
Gold is in finite supply. And demand for the precious metal usually climbs during inflationary periods. That's because investors look to the precious metal as a safe way to store the value of their savings in times of persistent inflation. So, during these times, the price of the commodity tends to rise. And that's been proven in recent weeks as the price of gold has broken numerous records. With gold up more than $150 from March, it makes sense to buy in now before it becomes prohibitive.
Compare your gold investment options now.
Silver
Silver is another precious metal that may be worth investing in while inflation persists. As is the case with gold, the price of silver is typically at the mercy of supply and demand. And while silver's price isn't quite as stable as the price of gold, the precious metal can offer protection during inflationary periods.
But that's not the only reason to consider investing in silver right now. Many of the industrial uses of silver will likely continue to produce meaningful demand, even in the face of rising prices. The precious metal is commonly used in the healthcare and renewable energy sectors. That's important as these sectors can continue growing regardless of the state of the economy or inflation. Since medical needs aren't impacted by economic conditions, medical demand isn't likely to falter.
These sectors, in combination with safe-haven demand among investors, may lead to growth in silver's price ahead.
Real estate
Inflation ran hot in March for the third month in a row, and in all three reports (January, February and March), growth in housing costs were cited as one of the leading drivers of the gains in overall prices. As such, investing in real estate may be an effective way to protect your portfolio against inflation.
Aside from its position as an inflation hedge, real estate can also become an income producer. After all, you have the option to turn your real estate into a rental property, potentially generating regular income.
The bottom line
As inflation continues to devalue the dollar, it's wise to make moves to protect your portfolio. Investing in precious metals, like gold and silver, can protect your portfolio's value amid rising inflation. Moreover, real estate investments may give you a way to generate a regular income while you protect your portfolio from the dollar-devaluing impact of mounting inflation. Whatever option you choose, consider making your move quickly as inflation shows no signs of slowing.
