Growth Oriented Approaches to Outpace Inflationary Pressures
The world is in a tough economic predicament at the moment. Inflation is running rampant, and recessionary pressures are being brought to bear. With 2022 rapidly closing, investors are carefully eyeing the markets for viable opportunities.
With the stock market in dire straits, making heads or tails of suitable investments is challenging. Equities markets have relinquished all their gains, due in part to rising interest rates designed to quell inflation. For many folks, stocks are now persona non-grata. That leaves many of us in a quandary. How should personal disposable income (PDI) be invested to generate a healthy ROI?
We’ve come up with nine alternatives to run-of-the-mill investments, each of which is worth considering as part of a diversified portfolio.
- Dividend Stocks
- i-Series Treasury Bonds
- High-Yield Savings Bonds
- Investments in Real Estate
- Foreign Exchange with Upside Potential
- Foreign Bank Accounts with Higher Interest Rates
- Gold and Precious Metals
- Commodities such as Oil & Natural Gas
- Cryptocurrencies with upside Potential
Dividend Stocks
When investing during inflationary times, dividend stocks are an excellent choice. Companies that offer a consistent and generous dividend yield can provide investors with some stability in the face of market volatility. Furthermore, these stocks can also appreciate if their underlying fundamentals remain sound.
i-Series Treasury Bonds
These bonds come with a fixed interest rate and are backed by the full faith and credit of the U.S. government. The i-Series is particularly attractive because its interest rates adjust for inflation, making it a great hedge against rising prices.
High-Yield Savings Bonds
High-yield savings bonds are another way to generate income in an uncertain economic environment without taking on too much risk. These bonds are issued by various companies or governments and typically pay out regular fixed payments over the bond’s life until maturity, when you get your principal back plus any additional accrued interest earned along the way.
Investments in Real Estate
Investing in real estate isn’t just about buying properties; there are many different ways to invest, such as REITs (Real Estate Investment Trusts). A REIT is a company that owns or finances income-producing real estate such as apartment complexes, office buildings, shopping centres etc., which then distributes most of its profits to shareholders in form of dividends each year, thus providing them with steady cash flow streams even during tough economic conditions like inflationary times.
Foreign Exchange with Upside Potential
Currency trading can be highly lucrative if done correctly but carries considerable risks due to exchange rate fluctuations. Foreign exchange markets tend to move rapidly, so traders need to have a solid understanding of Forex trading strategy and access up-to-date information on currency movements at all times. While there’s no guarantee that you’ll make money from this type of investment, it does present an opportunity for savvy investors who know what they’re doing.
Foreign Bank Accounts with Higher Interest Rates
Many foreign banks offer higher yields than domestic ones, especially when considering factors such as currency conversion fees. If you’re looking for increased returns without too much risk, consider opening up an overseas bank account where your money could earn more than what’s available domestically while still being protected from declines due to inflationary pressures.
Gold & Precious Metals
Gold and other precious metals have historically been considered safe-haven investments, as their value tends to rise in times of economic turmoil. Investing in gold can be done through physical coins or bars, ETFs (exchange traded funds), futures, stocks of mining companies, or even buying jewelry.
Commodities
Commodities such as oil, natural gas, and agricultural products are often seen as good hedges against inflation because they tend to increase in value when the cost of living rises. Investors can purchase commodities directly through futures markets or indirectly via mutual funds that invest in commodity-related companies.
Cryptocurrencies
Cryptocurrencies like Bitcoin have become increasingly popular over the past few years due to their decentralized nature and potential for high returns on investment. However, since cryptocurrencies are relatively new and unregulated investments, investors should proceed with caution before allocating any capital towards them – the recent collapse of FTX is a case in point. On the positive side, there is enough volatility to make a minor crypto investment worth considering.
The Bottom Line: Do What Makes Dollars & Sense
Inflation creates uncertainty which means traditional investments may not be suitable during these trying times; however, by diversifying one’s portfolio across multiple asset classes, one can ensure greater return potential while minimizing exposure to losses should things turn for worse unexpectedly. While there are no guarantees, these strategies can help investors weather the storm and come out on top in the long run.
