The best two vehicles to hedge your savings against inflation

The past two years, 2020 to 2022, have seen the highest inflation rate in 40 years, since 1981. Inflation progression hurts our savings and make them lose their purchase value over the years.

The $100 000 you saved 20 years ago cannot no longer buy you the same home you visited in the year 2000.

How can we preserve the purchase value of our savings?

When you are not a financial expert and need to find tangible and safe ways to preserve the value of your savings, you can consider these two vehicles: 1) Real Estate and 2) Gold

1. Real estate

Real estate has always been one of the safest means of investments for people from around the world, no financial expertise needed.

Home prices in major cities are always on the rise and preserve their value against inflation.

Advantages of Real Estate :

  • It can pay you dividends through rent
  • Lower your taxable income when you factor in depreciation

Look to invest in real estate in safe neighbourhoods and in cities where populations are expected to increase.

You can also turn to REITs (or real estate investment trusts), which are companies that own and operate portfolios of properties. REITs provide income through rents and leases and they often pay higher yields than bonds. They allow you to invest in real estate without the hassle of managing properties.

2. Gold

Although the price of gold can fluctuate over a short period of time, historical charts show that its price increased steadily over the years which make it a reliable vehicle to protect your savings against inflation.

Advantages of gold:

  • Gold is an easy commodity to buy and sell on any market and can be easily transferred from one place to the other. It can give you flexibility to relocate anywhere in the world and be able to move parts of your savings along the way.
  • Gold does not need maintenance and does not depreciate

In a nutshell, follow basic tips to up your savings and use a high-yield savings account while waiting to save enough for Real Estate of Gold savings.

Photo by maitree rimthong

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