There are huge concerns and queries from various investors on rising inflation rates. People largely worried about the value of their investments because of the inflation. Most of these investors are in search to find a fail proof solution for there portfolio to give them handsome returns to meet inflation. Yes. An intelligent investor can add such instruments to his portfolio in various forms to shield him against inflation. Below are the best investment instruments to meet these requirements:
A well formed financial plan should contain considerable part of investment instruments able to provide very good returns from long run to meet any inflation. A good financial planner should be able to identify the possible future inflations and capable to plan and consider possible methods to beat inflation when he designing a financial plan for his customer.
These are some identified investment instrument that could be able to shield your investments against inflation in a long run.
1. Investments in gold – Gold known as the very best hedge against inflation. Having any forms of gold investments is a best way to beat rising inflation in the future. This is due to the ability of gold to adjust its price against the inflation rate and time to time. We can have various forms of gold investment instruments in our portfolio. Buying gold bars, coins, ornaments, subscribing gold mutual funds in a systematic way, purchasing and holding gold exchange traded funds and even a subscription of mutual funds that focused to investing only on the stocks of gold mining companies around the world are best to add and construct your gold portfolio.
2. Investments in real estate – Real estate also known as a good instrument to beat inflation. The nature is because of the price hike happening along with the inflation rates. Not only that, the demand on real estate is huge and that increasing the price time to time. Real estate price and rent are two factors always moving with inflation and thus it can be considered as a good investment to beat inflation. Various forms of investments are available to get real estate exposure to you portfolio. Buying lands or real estate plots, second or third home to give to rend, buying business properties, investing in real estate mutual funds and trusts are some of the best options.
3. Investments in equities : Investment in equities and equity exposure in the portfolio can be a good decision to beat inflation in a long run. This is considerable because of the high income generating capacity of equity instrument in the long run compare with any traditional debt instruements that provide limited returns. I am personally interested equities because of the possibility of getting 1000% returns in long run. One can choose equity to his portfolio by investing to various forms of equity investments. Direct equity investment, Investing through mutual funds, investing through exchange traded funds, buying index funds are some of the best know equity investment forms.
4. Investing in overseas market – Investing in overseas market especially growing economies not only provide international equity exposure as well as provide very good returns in long runs. One can consider overseas equities as a part of his/her portfolio to shield against inflation because of the possible high returns in the future. One can purchase mutual funds that investing to the international equities especially to the growing economies is a good idea.
Debt instruments are not providing shield against inflation because of its fixed return nature. A portfolio with majority of debt instruments are not at all recommended to beat the inflation. Even though, limited debt exposure in your equity is a must to balance your portfolio.
So, it is the time to think independently and move forward to plan and create a well balanced portfolio to escape from the hands of inflation. One should use the knowledge or get proper advice from experienced as well as qualified financial planners to identify the best proportion of above mentioned instruments to their portfolio. This will vary depends on one’s life styles, financial status, risk profile and goals. So select carefully and feel free in life.
Please critique and comment freely! If there is a step I missed or that you think needs to be tacked onto the end, please let me know and I’ll add it.