Safe Investments during Inflation

Inflation can be explained in simple words as an economic situation where the price of food and commodity rises steadily. Rising inflation results in decline of money’s purchasing power. Finding ways to invest money safely during inflation concerns many people as the economy is unstable.

Real estate is a good option to invest during inflation. This sector grows irrespective of what the economic situation is and guarantees higher returns. Investing in Real Estate Investment Funds is a good option as the fund in used to develop real estate properties and rentals.

Investing in metals like gold and silver in another safe investment during inflation. Their demand and price never drops and each year the value increases thus giving you good return on your investment. Gold is an asset that one must hold on. Investing in silver in the current situation is a smart investment. Not everyone can afford to buy gold and that is why silver is touted as poor man’s gold. The price of silver is predicted to rise in the near future thus investing in silver is a safe bet.

Treasury Inflation-Protected Securities, often called TIPS, are issued by the U.S. Treasury as well as some other national governments. The main purpose of these securities is to guard investors from the negative outcome of inflation. TIPS are safe investments as they are low risk investments because of the backing of US government. The value of these securities rises with inflation without any change in the interest rate.

During inflation, people hold on to their money. However, during inflation the power of money reduces therefore it is smart to use that money and invest in kind of money instead of maintaining liquidity. Investing in crude oil is another way of investing smartly during inflation. Crude oil is inelastic in nature. This means that the increase and decrease in the price of crude oil does not affect its demand. There are various modes and funds through which one can invest in crude oil but it is advisable to read all the pro and cons before investing in commodities like crude oil.

Investing in emerging market outside your country is also safe investment during inflation. Investing in emerging currencies, equities and investment funds can yield higher returns in the future. Another safe investment is getting involved in growing industries like power and energy, especially solar power industry. The electricity costs are going up and people are getting environmental conscious hence solar power is high potential industry for future growth.

Investing in niche business which is least affected by inflation is an ideal way to use money and get higher returns. There are many commodities that are inelastic in nature thus inflation do not affect their demand. Identifying niche need and starting your own venture is also a good way to beat inflation if you can arrange for initial investment.