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Experts Explain: What Are The Safest Investments In Times Of High Inflation?

  • By Jenna Gleespen
  • May 13, 2022
safest investments in times of high inflation

Inflation has been a hot topic lately as global economies have seen interest rates and the cost of living sky rocket in the past few months. But what are the safest investments in times of high inflation? We spoke to some experts to find out.

TIPS Can be a Safe Investment

Joe Troyer, CEO & Growth Advisor of Review Grower says: 

safest investments

 

“TIPS are designed to protect your investment from rising prices and are my recommended investment during times of high inflation. TIPS (inflation-adjusted securities) are sold by the Treasury. Your interest payments will rise as a result, but you’ll also reap the benefits of inflation.

Remember that TIPS can only safeguard your purchasing power and not create growth, even if their inflation protection is appealing. For the past ten years, the iShares TIPS Bond ETF has returned more than 3% every year.

TIPS investors are concerned about deflation. The value of a TIPS can fall while you’re still earning interest, even though you’ll never get less than the initial par value.”

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ETFs are Another Option

Josh Pelletier from BarBend tells us:

safest investments

“Bonds, in my perspective, often provide a fixed payment for the duration of the bond, which exposes the broad side of the bond to inflation increases.

However, one approach to reduce this effect is with a floating rate bond, in which the dividend increases in reaction to interest rate increases induced by rising inflation.

One option to purchase these is through exchange-traded funds (ETFs) or mutual funds, which often hold a diverse portfolio of such bonds. Thus, in addition to inflation protection, you’ll gain some diversity, which may result in a lower risk profile for your portfolio.” 

Some Experts Highly Recommend Real Estate Investments

 Kyle Sennott, owner and managing partner of New Funding Resources, explains: 

safest investments

“Savers with money in the bank typically take on the brunt of inflation. Real estate, historically, offers a hedge against inflation.

Almost every time inflation spikes, it’s closely followed by an increase in real estate prices mitigating its effects. In addition, since most homeowners and real estate investors use debt (mortgages) to finance their purchases, that debt becomes cheaper as inflation increases.

As a result, homeowners and real estate investors typically weather the inflationary periods better than stock and bonds investors.”

Joseph Dittman from www.christianhomebuyers.com says:

“In periods of high inflation, real estate is frequently regarded as a reasonably secure investment since it tends to keep or even rise in value. With interest rates at record lows, many consumers are eager to invest in tangible assets like real estate.

And, because property prices are now low in comparison to historical norms, now may be a good time to buy before they rise in the near future. I would love to share more of my knowledge and experiences regarding residential investing.”

Specifically, as a Passive Form of Income

 David Friedman, CEO and co-founder of Knox Financial says:

safest investments

“No one has a crystal ball for how bad inflation will be over the next five to 10 years. Still, when thinking about how to invest, it’s safe to assume that in a best-case scenario we’ll see modest inflation over the next decade, and in a worst-case scenario we’ll see significant inflation that effectively diminishes people’s savings.

Given this reality, the question for people with money to invest becomes: Where’s the best place to put your money with moderate to significant inflation on the horizon?

In beginning to answer this question, imagine you could buy something today, and pay for it later. That’s how mortgages work. You buy a property now, lock in the price and pay for it over time.

Banks, in return, collect interest on the loan and offer buyers fixed interest rates at the start of the mortgage for its duration.

This is not a get-rich-quick scheme. It’s a patience game. Buy property and set it up so that your investment experience is passive. Then, just hold it.

Holding is the magic move. People often get advice from financial experts around making smart moves and shrewd decisions. What is less talked about is just holding and letting both inflation and real growth occur while you live your life.

Many of the world’s best investors know how holding wins — just take a look at the returns Warren Buffet has seen from holding on to Coca-Cola shares for more than 30 years!”

Foreign Investments Are One Way to Go

Max Shak from nerdigital.com says: 

safest investments

“Inflation can be prepared for by looking at macro and micro aspects.60 years ago, you could get a cup of coffee for 5 cents, but today, that same cup might cost you $5. When the economy is good, it is the government’s responsibility to invest in infrastructure and public amenities.

Let’s discuss whether the current government has the vision to take the country to greater heights. Since the end of the 20th century, China has invested heavily in the construction of highways, high-speed rail, airports, seaports, public amenities, and improving the education, healthcare, and housing sectors. 

As a result of the subprime mortgage crisis and the global financial crisis, China accelerated its infrastructure spending with a stimulus package of 4 trillion RMB. 

What would today’s replacement cost be for these developments? It will be like India today if the Chinese government doesn’t have a long-term view and spends more money during sunny days. India cannot be as developed as China in the next 30 years as its government hardly has the resources to spend on that level of spending.

Because of inflation, development costs will skyrocket by 10 or 20 times as they do today. That is why India cannot be as developed as China in the next 30 years. 

Regarding micro aspects, they are mostly dealt with at an individual (or company) level. How much money is sitting in your bank account? How long are you planning to invest? Do you see it lasting over a longer period of time to outlast the current high inflation rate? What type of investment might be affected by the legal system (and taxation) in your country? In the face of high inflation, which asset classes benefited most? 

Where are the currencies that are more likely to strengthen in comparison with the US dollar? You can focus on investing in assets that are denominated in US dollars if you still have confidence in the US dollar.

I am not Chinese, but I am confident in the strength of the RMB and China’s economy. It is my physical stock of a Chinese-only product that I have purchased and hold. As an asset improves in quality (and therefore in price), it will increase in value over time. 

Year after year, the existing stock in the market diminishes rapidly, and is not replaced or replenished. As a result, the cost of substitutes will increase. Product prices are transparent and assets are easily disposable. Markets are in China, Hong Kong, Taiwan, Japan, South Korea, South East Asia, and South America. The main advantage is that profits are tax-free.

This type of investment is not appropriate for those who don’t prefer Chinese. Your best investments in any country are in your health, education, and home.Financial independence begins with the purchase of a home. Real estate cycles are cyclical. That is why you should time your purchase carefully. Property prices can collapse like they did today in a boom market.”

Gold and Silver are Fairly Safe Investments

Shawn Plummer from The Annuity Expert says: 

“Healthcare and education are two industries to invest in during times of inflation. These types of goods and services are fairly inelastic—no matter the price, people need healthcare to survive, and they need education to better their minds and increase their earning power.

We’ve also seen that the price of healthcare and education has outpaced both increases in wages and inflation historically. This trend is likely to continue.

Gold and silver are often mentioned as worthwhile stores of value in times of inflation. The problem is that the prices are already at historic highs and have been fluctuating around that mark since the pandemic began.

That could make gold, silver, and other precious metals a decent store of value, but if you want to see your investments give returns, then real estate and non-elastic sector stocks will probably do you better.”

Short-term Bonds are Another Good Way to Go

Daniel Foley, Founder of Daniel Foley SEO Consultancy explains:

safest investments

“Short-term bonds are equivalent to cash in a CD (certificate of deposit) or savings account in terms of investment strategy. Your funds are secure and easily accessible.

In addition, if increasing inflation leads to increased interest rates, short-term bonds will do better than long-term bonds. As a result, it’s recommended to stick to short to intermediate-term bonds as well as stay away from anything long-term.

Make sure your bonds or bond funds remain short-term, as they will be less affected if interest rates rise rapidly. Short-term bonds can also be reinvested at greater interest rates when they mature.”

Get Started Investing in Stocks, Even if You are a Beginner

And finally, Dean Lee, Head of eCommerce at 88Vape, tells us:

safest investments

“Stocks can be an excellent long-term inflation hedge, but if inflation jumps, they might suffer in the immediate term. It’s simpler than to ever get started in the world of investing if you’re new to it.

You’ll need to establish an account with a trading platform or brokerage to do so. To uncover the finest solutions for beginning investors, select reviewed more than a dozen internet brokers that provide zero-commission trading.

The best free stock trading brokerages provide the most investment alternatives, user-friendly technology, excellent customer service, and educational materials.”

Safest Investments in Times of High Inflation: Final Words

The above are just some of safest investments in times of high inflation. Real estate, precious metals, and bonds seem to be at the top of most of our experts lists. 

With that said, before you make any investments that could impact you financially, you should always speak with a qualified financial advisor. 

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Jenna Gleespen is a published author and copywriter specializing in personal and investment finance. Her expertise is in financial product reviews and stock market education.

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