After being at an annual rate of 1.4% in the month of Jan. and 1.7% in Feb, inflation increased to 2.6% in March, causing some experts, including Warren Buffet himself to warn on the surging prices.
“We are witnessing significant inflation,” Warren Buffett said to attendees at his annual shareholder meeting. “We will raise prices. We are seeing suppliers raising prices, and it seems accepted.”
With everyone focusing on inflation, let’s look at four strategies you can use to worry less about its affects on your finances — and maybe even come out ahead — if inflation does skyrocket.
1. Increase your earnings
When inflation happens, you can see it in two ways: prices are increasing or the dollar is losing its value. Either way, earning more is always a pretty good solution.
If you are unemployed or have reduced hours, consider using your free time to develop your skills and position yourself for a larger income. This can mean freelancing or checking if it’s a good time for a career change to get an even larger salary.
2. Play the market
Stocks have normally beaten inflation to a large degree, making them among the strongest hedges against it.
You can benefit from inflation by investing in areas of the economy that might benefit from increasing prices, like tech, food, construction or energy. Companies like Procter & Gamble, Shake Shack and medical manufacturer McKesson all have raised their prices or are working on increasing them later this year.
Weigh the pros and cons of every stock, use apps, get involved online and get in the game.
3. Go metal
Inflation fears are always good for hard assets such as silver and gold. Both metals have done well over the previous five years, with the price of gold increasing by 44% over this time-span and silver’s going up by an even better 54%.
You can have precious metals directly by buying coins or bars, or take a more liberal approach and buy ETFs that hold the silver and gold for you.
4. Use real estate
Real estate has been among the most reliable investment plays an investor can make.
The housing market was on a serious upward path since around Q4 of 2011, when the median price was right above $221,000. At the end of this past quarter, it was $347,500.
If you have the money for a home purchase, start looking at mortgage rates today and find yourself the lowest rate possible. The best mortgage rates tend to go to people with the highest FICO score, so do everything you can to increase it.
If that is out of reach, you can instead buy into real estate without purchasing a property by investing in a real estate investment trust, or REIT for short.
Not everyone thinks inflation’s latest increase is a sign of terrible things to come. Buffett himself stated that it doesn’t seem to be stopping many Americans from spending.
So if you are doing well, you may want to ignore the bad news. Otherwise, these 4 tips will help you prepare for inflation.