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How do hedge inflation?
by devops000 5y ago
How do hedge inflation?
- paulpauper 5y agoIndex funds (S&P 500 up 23% vs 5% cpi) Real estate, mortgages
- ak_111 5y agoKnow the risks though: when inflation increases very fast, the Feds might end up having to respond with a shock, and usually real estates are the first to respond to this shock by losing 5-10%.
- deleted 5y ago[deleted]
- ByteJockey 5y agoThose are investments (which carry certain risks). Gold is traditionally used specifically as a hedge against inflation (though you won't be getting nearly the returns over the long term compared to index funds).
- baq 5y agoAs evidenced in the past 18 months. Oh wait. Gold is a terrible inflation hedge. Any other commodity worked better. Basically anything that is a part of the cpi basket is an inflation hedge. (Insert used car meme.)
- wallacoloo 5y ago> Basically anything that is a part of the cpi basket is an inflation hedge. (Insert used car meme.) much of the CPI are depreciatory or non-durable goods. i can’t hedge against multi-year inflation by purchasing meat and dairy. if i buy a car as you suggest, it’s not likely to be worth as much 5 years from now than today. or do you mean not literally buying the CPI basket, but buying commodity futures, stock in producer companies, etc?
- baq 5y agoyes, exactly, except not necessarily futures; commodity etfs are just fine, so are energy companies, materials, etc. of course you have to know when the regime changes, see e.g. energy prices in the past 3 months.
- paulpauper 5y agoGold is better hedge if your currency is in freefall such as in Turkey. Not so great for Americans, when the US dollar is the global unit of wealth.