Inflation is all the rage after last week’s much hotter than expected inflation numbers. Our base case remains that this period of higher inflation will be transitory, as many of the forces that have kept a lid on inflation over the past decade plus are still in place. Things like technology innovation, globalization, the Amazon effect, increased productivity and efficiency, automation, and high debt (which puts downward pressure on inflation) are all still firmly in play and should help keep inflation in check later this year and beyond.
What should an investor do if they are fearful this bout of inflation will stick around much longer than expected? “Yes, inflation eats away at the purchasing power of the US dollar, but there are ways for investors to protect themselves,” explained LPL Financial Chief Market Strategist Ryan Detrick. “If you are worried about inflation, commodities, real estate, value stocks, TIPS, and bank loans all could be nice places to get some protection from the dreaded i-word.” (TIPS are Treasury Inflation-Protected Securities)
Here’s our list of ways to help protect your portfolios against inflation:
As shown in the LPL Chart of the Day, there are places to invest and hedge yourself against higher inflation.
Ryan and Jeff Buchbinder discussed inflation and where to invest with higher inflation in great detail in the latest LPL Market Signals podcast. You can watch the discussion below.
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