Inflation is the number two anxiety of retirees following only concern about health. But what can you do? No matter how you invest, your money is always subject to the rising costs of inflation. Right? Wrong! There are many financial-savvy ways that you can invest your money while beating inflation at the same time.
Everyone agrees. Buying stocks is the smartest way to beat inflation. The best stocks to purchase are energy-related. That is, primarily, natural gas and oil. Materials stocks are the second best – think metals, aluminum, precious materials including gold, and glass. Telecommunications comes in third. If you are able to, put one third into such equities, more if you have a little (or a lot of) wiggle room in your budget. Smaller stocks can also keep you ahead of inflation.
Look into Real Estate
You really cannot go wrong investing in real estate. Especially when considered over long periods of time, the prices of homes more than keep up with, if not surpass, inflation. This is largely due to the fact that no more land can be created. Thus, property keeps its inherent value and the value appreciates with inflation.
If you are unable to purchase blocks of real estate, you can instead buy Real Estate Investment Trusts. These are like stocks and can be obtained via brokers invested in real estate – sort of like a real estate mutual fund. REITs are nice as you can make small to large investments in real estate and liquidate any time.
Delay Social Security
If you are in good health and are financially comfortable, consider waiting to collect Social Security benefits. This way you will end up receiving larger monthly checks that have been inflation-protected.
Purchase Foreign Investments
If you are able to, consider investing abroad. You might invest in foreign currency, a foreign company, or mutual funds made up of companies in other countries. These investments are not linked to the US dollar and, therefore, will not be affected by inflation.
Invest in Consumer Goods Funds
Consumer goods are everyday goods that are used by everyone all the time. For example, food, cleaning supplies, and personal products. During times of inflation, the prices of consumer goods also increase. If you own stocks of those companies, your rate of return will go up as well. This is a good way to keep up with the rate of inflation.
Adjust Your Portfolio
You might need to shift a portion of your 401K into a foreign mutual fund. Talk with a financial adviser to see how you can change your portfolio to fit your financial needs – and beat inflation.
If you are young and still in the workforce, keep working as long as you can. Wages usually keep up with inflation.
Just like in the game of chess, you must think a few steps ahead in the world of investing. Saving is not enough. Investing is not enough. You have to consider all variables – especially inflation – while planning your future.