Best Asset Classes that Beat Inflation – Stocks, Mutual Funds, Real Estate & more
Let’s have a look at the best asset classes that beat inflation.
Perhaps, you’re mistaken if you think that putting your entire hard-earned money in a saving account is enough to pile up sufficient wealth for the future.
If you’ve multiple saving accounts, of course, you’re incurring a monetary loss. This might be out of your site, but it’s very apparent in inflation.
The value of rupees for which you’re working day and night can drop significantly after a year.
Suppose you’ve earned Rs.100, after one year it’ll worth only Rs.92 if we assume the inflation rate at 8%.
So, if you are used to saving income instead of investing, you can always make plans and shift.
The return obtained from banks isn’t sufficient to put off the monetary loss. All these things become imperative to understand because of the booming inflation rate.
After the global crisis, somehow, people can manage to recover from their financial conditions. Still, inflation comes forefront to raise more difficulties for us.
That’s why; it becomes crucial to take those asset classes into consideration that beats inflation. So, your money keeps generating income for you even though the economy is poorly performing.
List of Top Asset Classes that Beat Inflation
Here is the list of Best Asset Classes that Beat Inflation –
- Real Estate
- Bank Fixed Deposits
- Inflation Indexed Bonds
- Mutual Fund
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Real Estate – Best Asset Class to Beat Inflation
Undoubtedly, real estate is one of the most favorite and essential investment options that people choose. It’s all due to the higher returns, safe investment, and more options that attract investors.
Every year, the price of real estate is booming. Even though you glance at the properties around you and compare their prices a few years back and now, you’ll be amazed at what a big hike it has got.
Despite inflation, the prices of real estate keep going up. That’s why you can think about investing in real estate.
The tax issues and fluctuating prices of the property don’t make it that attractive option.
Commodities – Top Asset Class to Beat Inflation
Investment in commodities is another excellent option to generate income while beating inflation. Over the past few decades, investment in commodities has skyrocketed.
Commodities of daily use observed a significant hike over the past few years. Owing to this, you’ll always see a big boost in the retail prices of every item involved in the process of producing them.
For instance, if you invest in gold mining equities, you can enjoy a higher return.
Even though inflation has scattered the economy, you can find opportunities in commodities because prices hardly go down here.
Stocks – Top Asset Classes to Beat Inflation
Though, many stocks aren’t that reliable as compared to the options discussed before. Still, some critical factors may help you stand out in the crowd where other’s investment is likely to drown.
The crucial thing that’ll make it possible is to choose individual stocks that come with a higher dividend.
These dividends must belong to a stable company. However, if you have a higher amount to invest, you should seek advice from Portfolio management companies.
In this way, you’ll get access to plenty of strategies that, for an inexperienced investor, is tricky to understand and implement.
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Bank Fixed Deposits
Possible, saving in FDs isn’t a lucrative option for most of us. Still, it’s a safe option if you want to protect your money in some instances when the inflation rate goes high.
However, the lower return from Bank Fixed Deposit can’t beat the inflation. Still, people opt for FDs because they are tax-free and risk-free.
At a time of poor economy, you’ll be able to earn decent return value from your saved money in FDs. That’s why you can choose this option too.
Gold – Best Asset Classes to Beat Inflation
Of course, it’s the standard option for investment. If you check the gold history, you’ll see the prices have only inclined instead of drop.
Gold holds a proven track record that whoever will opt for this; he/she will probably earn profits out of it.
Even though the inflation is at its peak, you’ll see that the gold prices increase. Furthermore, you can invest in gold in several ways, such as investing in gold shares, futures, ETFs, etc.
Inflation-Indexed Bonds is a genuinely fantastic option to beat inflation. It’s due to the reason that these asset classes keep your money safe even though, whatever the crisis has hit the economy.
You can feel secure after investing in inflation-indexed bonds as both principal and interest will stay safe.
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Mutual Funds – Best Asset Classes that Beat Inflation
Mutual Funds investment does come at a certain degree of risk.
Still, if you’re taking advice from the experts and choosing a reliable company for investments, you can earn profits and feel safe despite inflation.
Qualified and experienced experts manage these funds, and you enjoy risk-adjusted returns.
You can also choose the SIP (Systematic Investment Plans) to beat the inflation, as it’s also a famous option.
SIPs are popular due to the compounding impact that makes some investments more profitable for an investor with an attractive margin.
Re-Align your Portfolio
Of course, it isn’t an asset class, but this advice must be followed even though you’re holding an asset class that beat inflation or not.
Though, it’s impossible to put off the risk entirely. Still, it’s highly recommended to re-evaluate the portfolio. It helps you get an idea of a particular asset’s risk, goals, and time horizon.
What are the booming opportunities, and where your asset’s price can fall and leave you in a significant loss?
You’ll get a full-fledged insight into your portfolio by considering this most critical step.
Assets Classes that Beat Inflation – Conclusion
If you’re looking for the best hedge against inflation, the above asset classes are probably going to live up to your hopes.
Investment in Gold, Fixed Income, Equities, and Real Estate can derive a higher return. But alongside, these options can also help you to stand out in the market with high inflation.
These assets can better deal with any turmoil emerging in the market. That’s why you can feel free to invest your money in these asset classes.
But don’t forget to re-align your portfolio whenever required.
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