How To Control Inflation With Investments
It is about time to think how to protect or optimize our portfolios and control inflation damages. These are some ideas:
- Months ago, according to media smart investors and real rich people moved part of their wealth in inflation-adjusted Treasury bonds, good for them. Inflation-adjusted bonds are no more the bargain they once were.
- Gold has gained about 85% since its lows in February 2001, largely because of the declining value of the dollar. The gold is recognized as money when paper is loosing value.
- Oil the "black gold" and energy mutual funds may be a choice for tough guys who can take volatility jumps. I would not do it.
- Gold funds in gold-mining stocks rise much more than the metal itself. A small position in a gold fund may help.
- Real estate and real estate funds along with gold are classic inflation hedges. Income properties investments are typically held for long-term gain and as a hedge against inflation.
All we can do, it is to recognize that inflation is here and it is higher than we think.
Real estate investors actually profit from inflation because with a 30% equity, just a 3% inflationary increase in property value results in a 10% return on investment (ROI)
Without even considering normal operating profits (cash flow), tax benefits (depreciation for rentals) and appreciation (making improvements). This is the whole point with 40% to 50% ROI.
Real estate can be purchased in many forms: single family residential housing, apartments, raw land, shopping centers, industrial buildings, warehouse, etc.
The investment can be direct, or through various kinds of partnerships and investment trusts or various instruments as: Real Estate Investment Trust (REIT) and mutual funds.
This is how we control inflation' damage.
Markets await Bernanke as centbankers gather - guardian.co.uk
KIMA CBS 29 Markets await Bernanke as centbankers gather guardian.co.uk, UK - " Inflation has picked up, but some of the underlying components of inflation have moderated, particularly oil. What can he say? ... In a Hole B-52 Ben' Bernanke Wins Reprieve in Book by Lehman's Harris Fed united in battle to control core inflation -Canada Inflation Accelerates to Fastest Since 2003 (Update3) - Bloomberg
AFP Canada Inflation Accelerates to Fastest Since 2003 (Update3) Bloomberg - 21 (Bloomberg) -- Canada's annual inflation rate rose to the highest since 2003 in July because of a surge in gasoline prices for the country's drivers. ... Inflation almost neutralizes wage gains Inflation surpasses wage gains in Ontario Inflation slows in Alberta despite increase across Canada -Inflation spirals to 16-yr high, touches 12.63% - Economic Times
Times Now.tv Inflation spirals to 16-yr high, touches 12.63% Economic Times, India - NEW DELHI: Costlier food items, such as fruits, vegetables and milk, pushed the wholesale price-based inflation to 12.63% for the week-ended August 9, ... Inflation at 12.63% as food prices soar Inflation at 16-yr high of 12.63% Inflation up to 12.63% -