Ways To Fight Back Against Inflation

Every year, the power of our money diminishes, little by little. Things become more expensive, from goods to services and experiences. This is because of inflation, which occurs in response to increases to the money supply, or increased demand or rising costs of production. Inflation is unavoidable, and takes place in nearly every economy all over the world.

Inflation is necessary, but many people aren’t a fan since it means their money doesn’t go as far as it used to. While there is nothing you can do to stop inflation, there are some things you can do to fight back against it. Here are a few ideas to get some level of protection from inflation, to protect yourself and your family.

Invest in Commodities

One of the best ways to fight against inflation is by investing in goods or commodities, instead of money. Money is impacted by inflation as it has less power over time, but goods or commodities are not. In fact, most will become more valuable when inflation strikes. A good example is buying gold, as it has intrinsic value and its price likely won’t drop during inflation. In fact, it is more likely to go up, just like other goods and services.

While you could buy gold directly, there are also accounts available that allow you to hold gold as a qualified retirement investment. Be sure to learn about the top gold IRA companies if you are interested in this option. While no investment is completely risk-free, investing in gold and other commodities will certainly suffer less from inflation than your money will.

Find Cheaper Substitutions in Your Life

Another way to combat inflation is to find cheaper alternatives to the goods and services you spend money on. A great example of this is buying more of the generic brands at the grocery store. In fact, many of these generic brands were actually created in response to high inflation in the past.

If you can switch to a cheaper brand for groceries, clothes and other items, you won’t be hit as hard by inflation as those who continue to buy the expensive items. Buying in bulk can also be a good way to stock up on non-perishable items at a very low price. Also, be aware that inflation is generally quite slow, so there is time to plan over the months and years ahead.

While there are extreme examples all over the world, inflation will only go up around 1% to 3% on average every year. So while it is important to prepare for inflation, you don’t immediately have to switch to the budget brands and start pinching pennies right away.

Buy or Invest in Real Estate

Buying real estate is another way to lessen the blow of inflation. This is because real estate will often increase in value over time, especially during inflationary periods. Even if home prices don’t skyrocket, they are likely to hold steady. Also, if you can lock in a relatively low interest rate for the long term (like a mortgage), it can save you from the higher rates that often come from higher inflation.

There are several options when it comes to buying or investing in real estate. You can buy a home to live in, buy a home to rent out or sell, or even invest in a REIT (real estate investment trust). The option you choose depends on how much you want to spend/invest, what your goals are and how much work you want to do.

Lessening the Impact of Inflation

Inflation is unavoidable, but there are certainly some things you can do to fight back. By investing in commodities, buying real estate and finding cheaper alternatives in your life, you can minimize the effect inflation will have on your budget.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.