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How to Hedge Your Investments Against Inflation

Interests and costs are rising while the market falls. Here are some tips for hedging your investments against ongoing inflation.
8-1 Inflation
Photo by PiggyBank on Unsplash

Inflation in June 2022 hit its highest levels in over 40 years. The rising costs of everything, especially interest rates, have lowered the value of the dollar in your pocket. It also means your investment portfolio has taken a hit. But does it have to depreciate so intensely and rapidly?

Here are a few tips that can help you protect your investments. In some cases, they can even help you grow your wealth while the market shrinks.

Tip #1: Don’t panic

Yes, your mortgage payments may have gone up. Filling your gas tank has gone up. Everything, it seems, has gone up. Your personal investments, however, may be a different story.

If your investments have depreciated, it may not be as bad as others. In fact, pulling out may be a good idea for some, but a terrible idea for others.

Before making any drastic moves, look into how your portfolio is doing specifically. If it’s doing better than the average, the most prudent decision may be to do nothing at all. If parts are doing worse than the average, then you should look at pulling that specifically. Talk to your advisor for the best advice.

Tip #2: Think equities

Looking at the stock market right now may feel like a bad idea. In actuality, the right investments can actually help you protect your wealth instead. Investing in equities, like index funds, gives you an aggregate investment portfolio with companies who can pass the worst of inflation onto their customers instead of their shareholders. It can be an easy way to maintain the power of your spending without feeling like it should go under your mattress.

Tip #3: Look to the commodities markets

Gas is expensive right now. Everybody knows that. While efforts are being made to increase supply, it is likely to stay tight moving forward. Many experts are recommending those with access to oil and copper in their portfolios hedge against inflation. This may not pay off tomorrow, but it may be good for those thinking longer term.

Other tips for helping with inflation

While these tips are about your investments, it’s important to remember that there are everyday things we can do to help ourselves during inflation. Simple things like consolidating debt, making budgets and meal plans, and even looking at cutting excess spending are all helpful ways to feel the pressure of inflation a little bit less. With interest rates likely to climb higher, it may be prudent to think smaller in our everyday spending for the next little while.

This story is brought to you by Great West Media Content Studio. It is not written by and does not necessarily reflect the views of the editorial staff.

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