If Inflation Will Stay High, What Should I Invest in?

The real rate of inflation is likely higher than what the government of the Fed. Regardless of the official number, we have to do our best to keep up with it, and hopefully beat it if possible.

As Warren Buffett said, Rule #1 is do not lose money. This is the rule that almost all retail investors break. We need to learn about Risk Parity. Risk Parity is what Ray Dalio talks about, to weather the storm we need assets that provide cash flow regardless of the economic conditions.

What I’ll discuss are just some options that investors are looking at right now.

More money has moved into Money Market Funds which are essentially cash. The idea is that not making any profit is better than losing money. It also provides easy access to capital when you’re ready to deploy. This generally shouldn’t be a large percentage of the total capital invested at any given time as we know we’re losing to inflation.

iBonds are interesting because they can offer a high rate of interest, and at the time of this video they’re giving 6.89% on a government guaranteed investment. The only fine print here is that there’s a maximum of $10,000.

Short dated Treasuries have been looking much more attractive recently. In the case of 6 month US treasuries, at the time of recording are at nearly 5.1% interest. Reinvesting the interest every 6 months, and assuming inflation remains high, could be beneficial.

Gold and precious metals do not provide cash flow but are valuable in times of inflation over very long periods of time. They should not be ignored entirely.

Real estate can be a way to produce cash flow, even as inflation takes hold and the asset value declines. Always remember to factor in all 4 ways real estate makes money including Depreciation. This is a phantom loss on a property than effectively puts money in your pocket. If the asset was purchased properly, and is cash flowing, it can provide income that outpaces inflation. Make sure to buy in landlord-friendly areas only.

But if it was me, I would invest primarily in different businesses, especially eCommerce. There’s no better way to have all the benefits of an income producing asset, tax advantages, scalability, and geographical diversification.

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The Money GPS is the most active, most informative channel in the financial world. Day after day, breaking down the data and making it easy to understand. This channel is not here to help build a portfolio, give stock picks, or financial advice. It's simply data that is generally not found through conventional means.
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