Kovar Capital: Inflation proof investments

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Hey Taylor: Any investments I can make that will stand up well against inflation? I feel like the dollar has to weaken soon and I’m wondering how I can protect myself. — Jeremy

Hey Jeremy: There are a few good options for investors with inflation in their minds, and now is a great time to be looking into these investments. Even better news, most of these options are great additions to your portfolio in times of both high and low inflation.

Real estate. Historically, real estate makes its biggest gains when inflation goes up. This happens for a handful of reasons, including rising rent prices driving more people toward ownership. If you have the capital to buy a second property, this is a great option for you. If that’s outside the scope, you can look into REITs (Real Estate Investment Trusts) as a way to take advantage of the security of real estate without taking on sole ownership.

Stocks. Inflation can cause a mess of problems, but do you think Apple, Amazon, or Microsoft will struggle because the inflation rate goes up a point? Those shares may continue to rise in value, whereas the bag of money you have buried in the backyard will take a much bigger hit. High inflation makes growth stocks a little less appealing—don’t go nuts on buying shares of startup companies with big dreams and small reserves. Nevertheless, the stock market is generally a good place to hold your assets when guarding against inflation.

Commodities. Just like the companies I mentioned above, the products we need in our day-to-day lives aren’t going to let inflation get them down. I’ve always promoted timber and energy investing, and now might be an excellent opportunity to buy into those industries. You can either look to individual stocks or ETFs focused on the sectors you want to target. You can also consider precious metals, which I’m sure you’ve already thought about if you’re looking for ways to escape inflation. A lot of people get excited about gold during these times, and with good reason; the price has consistently gone up and always manages to weather inflation storms. Silver is another strong option, and you can decide between actually buying the metal itself, buying these commodities in stock form, or investing in the companies that mine the physical product.

It’s a pretty safe bet that an inflation hike is looming somewhere on the horizon, so these are good questions to be asking. Hopefully one of the above options works for you, and I’ll be interested to hear what you end up doing. Thanks for writing in!

Disclosure: Information presented is for educational purposes only and is not an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. To submit a question to be answered in this column, please send it via email to Question@GoFarWithKovar.com, or via USPS to Taylor Kovar, 415 S 1st St, Suite 300, Lufkin, TX 75901.

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