Climbing prices are bad for consumers and investors. What is the best way to stop inflation from eating away at the real value of your investments?
While most consumers view higher prices and inflation as a bad thing, the stock market frequently rises during periods of high inflation. This means your stock prices and dividends may increase.
How to stop inflation from eroding your purchasing power?
When prices rise, the Consumer Price Index (CPI) also rises. It may be prudent to buy TIPS (Treasury Inflation-Protected Securities) because they are pegged to the CPI.
REITS (real estate investment trusts) are a popular choice because rising prices also spill over to property values. Increases in rent are directly paid out to REIT owners in terms of higher dividends.
Listen to the episode to learn which investments are better avoided during times of high inflation (hint, CDs and annuities may fit into this category).