If you want to protect your wealth when inflation is high, it is better to own physical things like houses, rather than US dollars.
—Elon Musk (@elonmusk) March 14, 2022
US inflation hit a 40-year high of 7.9% in February, and the CEO shared his advice.
Markets are worried about inflation and the central banks trying to tame it by hiking interest rates. The assets that will maintain value best are what investors are looking for.
When inflation goes up, the purchasing power of dollars goes down. Assets valued in dollars could also lose value if a dollar is worth less.
Wall Street banks think that stocks are the best asset. Goldman Sachs encourages its clients to stay invested in the US stock market.
Goldman says they haven't recommended clients to underweight US equities.
Insider turned to five asset managers to look beyond the box.
According to David Morrison, senior market analyst at Trade Nation, gold and silver do well, and there are signs that both metals could gain in the future. Finding a way to invest is not easy.
Morrison told Insider that buying and holding the physical is one way to do it.
Morrison suggested buying gold miners, silver miners, or diversified miners.
TIPS are another good bet, according to the analyst at Wedbush Securities.
The worth of these bonds increases with inflation and decreases with deflation. Unlike conventional Treasuries, they are backed by the US government.
They pay a fixed rate twice a year, which is applied to the adjusted principal.
Randy Godsell of the Wealth Enhancement Group said that industrial warehouses could be an attractive subsector of real estate.
The chief investment strategist said that these have benefited from the spread of e- commerce. Even with higher inflation, they should continue to provide stable income.
Godsell told Insider that private real-estate funds offer an attractive way to gain access to this durable sector without the volatility of publicly traded REITs.
KC Mathews is the chief investment officer at UMB Bank.
The price of a value stock appears cheap when its financial performance is looked at. Their health is usually linked to the health of the economy and a higher level of interest rates.
Mathews said that demand in value sectors is not sensitive to inflation. Over the last two decades, growth has been better than value in times of inflation.
Projects for digital infrastructure and renewable energy offer good inflation protection, according to Richard Parfect.
He said that investors can find opportunities in real assets through funds that have come to market in the last year. They invest in things like internet coverage and 5G wireless, as well as the digital economy.
Music royalties and specialist property in social housing were mentioned by the portfolio manager. He said that many of these offer either direct or indirect inflation linkage.
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