Best Investment Strategies to Beat Inflation in 2021
The most familiar word in the economy is certainly inflation. Inflation has been a problem for countries for over 50 years. Bankers and economists are always trying to keep inflation under control. On the other hand, politicians use inflation to win elections. They make promises to fight and eliminate inflation.
So in this article, we will go deeper into inflation and we will show you what inflation is and why it is very important. Also, you will learn about the best inflation strategies in your fight against inflation.
What is Inflation and how does it affect your savings?
Inflation happens when the price of goods and services increases in a certain period of time. You need to make difference between just a regular price increase and inflation because there is a significant difference.
Inflation doesn’t come up at once and when the price of some goods and services go up. For example, if you go to your local store and buy eggs for $3 dollars and then the next week the same eggs are $5. This isn’t an example of inflation, it is just a fluctuation in prices for particular goods in the market.
If you see it from an economics perspective, inflation is when you see the bigger picture. So if we have an increase in the prices for many different products like gas, milk, college costs, and many different other goods and services.
Some economists say that a little bit of inflation can be a good thing because the economy can slowly increase the prices and companies can increase the wages.
High inflation means less spending power. This means you should find strategies to invest your money because your money will start losing value and you will lose purchasing power. Usually, an equity investment is a good way to save your money from inflation.
Although, when there is high inflation is seems like it is wrong to save some money, it can be wise to build up an emergency fund just in case.
What Do Successful People Invest In to Beat Inflation?
Warren Buffett is a legendary investor who is now 90 years old. He has been reading about inflation for a long period of time. So here are some investment strategies that beat inflation from Warren Buffett and how to make your money work for you.
- Invest money only in good businesses that have low capital needs
- Search for companies that can raise prices in a period of high inflation
- Take a closer look at Treasury Inflation-Protected Securities (TIPS) – investment endorsed by Warren
- Invest in your talents and try to be the best at what you do
- Stay away from traditional bonds
- Track your expenses with some app to know how much you are spending
- Invest in stocks or real estate.
Top 5 investing strategies according to Donald Trump:
- Always push yourself until you reach your goal. Set your mind to a strategy for what you need.
- Invest in stocks, bonds, and gold, but be prepared for the worst outcome
- Plan your spending, don’t spend more than you need to.
- Learn more about equity and bond markets
- Get the best deals possible when investing in real estate
Tips on how to profit from inflation by Robert Kiyosaki:
- Invest in commodities and energy products
- Don’t save money
- Buy real estate
- Spend money in buying precious metals
Types of investments that can beat Inflation
Here is the best type of investment strategies that beat inflation in 2021:
High-yield saving accounts
Pros: Your money is insured by the government, so basically this means you can never lose your money.
Cons: Your money can lose purchasing power.
Pros: There is a fixed rate and plus inflation rate you earn for your money.
Cons: Small return and also your money will lose purchasing power.
Certificates of deposit
Pros: The bank will pay you a set rate of interest after the end of the term decides.
Cons: If you withdraw your money early from the decided date you will lose the interest you earned.
Money market fund
Pros: You can get your money every time you want
Cons: Money market funds are less safe than High-yield saving accounts.
Pros: Buying quality bonds from large companies can earn you high interest rates.
Cons: Investing in corporate bonds can be a little bit risky if the company fail to make their promises.
Pros: Stocks that pay out dividends are less risky and are considered safe.
Cons: The risk of a company going bankrupt.
Pros: With preferred stocks, you will get a regular cash payout.
Cons: They are riskier than bonds.
Money market accounts
Pros: High interest rates.
Cons: The only risk with money market accounts is if the inflation rate is higher than the interest rate, so basically this means you will start losing money.
Pros: It is a great way to earn a fixed amount of money.
Cons: The contracts for fixed annuities are tricky and you must read them carefully.
Inflation is when your money starts to lose value. This can happen if the prices of goods and services increase dramatically or because the money supply has surged. It is pretty devastating happening for consumers and investors, so you need to be ready if there is high inflation and to prepare a strategy.
So, if you have concerns about inflation, then you should consider taking notes from some of the most successful people and how they cope with inflation. We hope that with this article we helped you to learn more about inflation and which inflation strategies to use in order to save your money.