Are rising prices and inflation going to hurt your investments? Here’s how to protect your nest egg.

Americans are paying more for everything from rental cars to hotels this spring because of pent-up demand for travel, which has been juiced by extra cash from stimulus checks.

But rising inflation won’t just weigh on your travel budget or your shopping bills. It could also affect your investments.

So what about your 401(k) and mutual funds? What should you be thinking about if prices keep rising?

While inflation eats away at the purchasing power of the dollar and decreases Americans’ ability to pay for goods, there are ways for investors to protect themselves, according to Ryan Detrick, chief market strategist at LPL Financial.

‘I really had sticker shock’:Will a reopening economy mean surging prices for Americans

No more driving distractions:High-tech windshields could change the way we drive

“If you are worried about inflation, (then) commodities, real estate, value stocks, TIPS (Treasury Inflation-Protected Securities) and bank loans all could be nice places to get some protection from the dreaded i-word,” Detrick said in a note.

Just a blip? Or higher prices ahead?

The Federal Reserve is keeping a close eye on rising prices after a surge in inflation last month ignited a debate over whether price increases will fade, or pick up steam and possibly lead to an overheating economy.

On Friday, Wall Street turned its attention to a key measure for inflation, April’s Personal Consumption Expenditures index, or PCE, which rose 3.1% from a year earlier (excluding volatile components like food and energy). When making policy decisions, the Fed’s preferred measure of inflation is the PCE data instead of the more widely known consumer price index, or CPI.

A longer bout of rising inflation could force the central bank to hike interest rates sooner than expected, which would push up borrowing costs for consumer loans like mortgages.

That’s spooked some Americans who wonder whether this is just a blip, or a return to the hyperinflation economy of the 1970s. Most economists, however, don’t expect spiraling inflation.

Why? Because many of the forces that have kept a lid on inflation for more than a decade remain in place, including tech innovation, globalization and increased productivity.

“Moderate inflation isn’t a big deal,” says Adam Lampe, CEO and co-founder at Mint Wealth Management, an investment advisory firm. “Keep in mind that if inflation does exceed expectations, the Fed has opportunities to control and manage it.

“We’re not going back to the hyperinflation period of the 1970s. We’re in a much more global world now.”

Many economists have argued that the leap in prices is a byproduct of a reopening economy and should abate by next year.

Still worried? Here’s what you can do

If you’re fearful this bout of inflation will stick around longer than expected, there are ways to protect your nest egg.

Investments in real estate, commodities and gold can help offset higher inflation, wealth manager say.

Real estate, for instance, can gain value amid inflation, while property owners can increase rent on tenants. Real estate investment trusts have also offered attractive returns in prior periods of rising inflation.

Commodities historically do well when the U.S. dollar is weak, and higher inflation tends to push the greenback lower.

“Inflation is inevitable, especially with the amount of money the government is spending,” says Patrick Healey, founder and president of Caliber Financial Partners, a financial planning firm. “From a financial standpoint, you do need to have some hedges in your portfolio.”

If you want to beat inflation over the long run, stick with stocks, Detrick says.

Since 1950, the average annual inflation rate based on the consumer price index has been 3.5%, while the S&P 500 has returned more than 9% annually, according to LPL Financial.

If you want to be more targeted, value stocks tend to benefit from higher inflation, experts say. Materials and energy companies stand to benefit from higher commodities prices, while higher interest rates tend to help financial stocks with higher profit margins.

What about cryptos to hedge inflation?

As for other alternative assets, some wealth managers prefer gold as a hedge against inflation over cryptocurrencies like bitcoins, which suffered another swoon recently.

Since 2010, the S&P 500 has tallied 10 trading days with declines of 5% or more while gold has suffered one such hit, according to Glenmede, an asset management firm. Bitcoin has notched 455 trading days of 5% moves in either direction in the past 11 years.

In the past two bear markets, Bitcoin fell just as much as the S&P 500, if not twice as much. So just when investors needed it to protect their portfolios most in a downturn, it failed in that regard, says Michael Reynolds, vice president of investment strategy at Glenmede.

“We’re not on the crypto bandwagon just yet,” Reynolds says. “There’s so much speculative activity in that corner of the market. It’s not something we’re comfortable with.”

News Related

OTHER NEWS

Tech scare sends Hong Kong stocks reeling in week as Chinese tutoring firms crash

Hong Kong stocks capped a weekly loss on lingering concerns about Beijing’s crackdown against internet-platform companies and as a surge in Delta variant cases clouds global economic recovery outlook. Chinese ... Read more »

Samsung Display to supply Apple with OLED as it ditches LCD technology

Photo by: Samsung Display/Facebook Samsung Display will be benefiting big time as Apple ditches the LCD technology and shifts to organic light-emitting diode (OLED) display panels for its new iPad ... Read more »

Volkswagen Korea drops prices for the new Tiguan SUV model

Photo by: Volkswagen Website Volkswagen Korea is lowering the prices of its newest SUV model, which is the Tiguan. The German automaker stated that it made the decision to drop ... Read more »

HBO shuts down Apple TV, forcing subscribers to upgrade to HBO Max

Photo by: Apple TV/Facebook HBO just shut down Apple TV on Thursday, July 22, and officially ended their integration that only started in May. Now subscribers will no longer be ... Read more »

Activision Blizzard sued by the state of California over discrimination, sexual harassment

Photo by: Activision Blizzard/Facebook Activision Blizzard that is known for its popular video game titles, including “Call of Duty” and “World of Warcraft,” has been sued by California's Department of ... Read more »

Consumer spending boom continues with 9% rise in May

Photo: Depositphotos.com Consumer spending soared by nearly 9% in May, but was still slightly down on April’s 9.7% rise, which itself was the biggest since World War II. However, the ... Read more »

Bankers expect bigger bonuses in 2022 as financial sector goes on Asia hiring spree

Financial services professionals in Asia are confident they will receive bigger bonuses in 2022 as banks and other institutions scramble to attract and retain talent in Asia, according to headhunting ... Read more »

DUG Drinks: World's first potato milk launched by Swedish vegan dairy brand

Photo by: DUG Drinks/Instagram DUG Drinks, a Swedish startup that produces vegan dairy products, just developed the very first potato-based milk in the world. The company has already launched the ... Read more »

Evergrande resolves debt dispute with Guangfa Bank after Hong Kong lenders withdrew mortgage loans to its apartment buyers

Heavily indebted developer China Evergrande said on Thursday that it resolved a dispute with a bank creditor that led to 132 million yuan (US$20 million) in its assets being frozen ... Read more »

At two years old, Shanghai's Star board is already bigger than Spain's capital market and shields investors from global tech rout

The Star Market, China’s Nasdaq-style board, which is celebrating its second anniversary, has emerged as a safe haven for investors seeking shelter from Beijing’s crackdown on technology companies. The board, ... Read more »

Hong Kong stocks snap three-day slump as oil firms rebound while Evergrande halts free-fall

Hong Kong stocks rose at the lunch break as Chinese oil giants advanced while shares of debt-stricken developer Evergrande surged in a relief rally. The Hang Seng Index rose 1.8 ... Read more »

China's yuan to become more influential part of the global financial system, survey shows

The Chinese yuan is on course to become a much more influential part of the global financial system with almost a third of central banks planning to add the currency ... Read more »

Indexes inch higher on Wall Street, preserving weekly gains

Major indexes edged higher on Wall Street after a day of muted trading, preserving their gains for the week. The S&P 500 emerged from a midday slump to end with ... Read more »

Intel raises full-year revenue forecast

Intel raised its annual revenue forecast on Thursday, focusing on its dual strategy of increasing in-house production as well as outsourcing to catch up with rivals. Intel, one of the ... Read more »

Macquarie Cloud Services achieves Azure Expert MSP status

Macquarie Cloud Services, part of Macquarie Telecom Group, has achieved Azure-only Expert MSP credentials. The company said it is the quickest and Australian partners has gone from inception to certification ... Read more »

Sophos buys UK network detection and response MSSP Braintrace

Sophos has purchased MSSP US-based startup Braintrace to get visibility into suspicious network traffic patterns, including encrypted traffic, without the need for man-in-the-middle decryption. The UK-based platform security vendor said ... Read more »

Collaboration software vendor Mural lands in ANZ, taps Robert Malkin as APAC boss

Digital workspace and visual collaboration software vendor Mural has hired Robert Malkin to lead its Asia-Pacific business. This marks the company’s launch into APAC, starting with Australia and New Zealand. ... Read more »

MNF Group closes $31m direct biz sale to Vonex

MNF Group has finalised its deal with Vonex for the sale of part of the company’s direct business for $31 million. The two signed the conditional term sheet on 7 ... Read more »

Wools of NZ, Primary Wool merger to go to farmer vote in November

About 2100 farmers will vote in November on a proposed merger between grower-owned export and marketing company Wools of New Zealand (WNZ) and Primary Wool Co-operative to form a fully ... Read more »

Covid 19 coronavirus transtasman bubble pause: Board of Airline Representatives pushes for wage help

An airline group says aviation businesses affected by the suspension of quarantine-free transtasman travel should be able to claim wage support. The Board of Airline representatives says the eight-week pause ... Read more »

Ingram's CloudBlue updates go-to-market program

Ingram Micro subsidiary CloudBlue has updated its ‘Go-To-Market (GTM) Fast-Track’ program, aiming to decrease time to market by 50 percent. Updates include virtual showrooms and greater insights, including access to ... Read more »

PUBLISH to make NFTs of national treasure of Korea, Hangul manuscript ‘Hunminjeongeum Haerye'

National Treasure No. 70, “Hunminjeongeum Haerye”. Credit: PUBLISH PUBLISH announced it has been contracted by Kansong Art Museum to implement the technical solution for the conversion of the Haerye Edition ... Read more »

Intel sales forecast implies rocky second half of 2021

Intel Corp said it still faces supply chain constraints and gave an annual sales forecast that implied a weak end of the year. The 2021 forecast of US$73.5 billion in ... Read more »

Mercedes plans to go all-electric by decade's end

Daimler AG’s luxury car brand Mercedes-Benz says it is stepping up its transition to electric cars, doubling the share of sales planned by 2025 and sketching out a market scenario ... Read more »

Sydney shrugs aside Covid-19, cooling measures and tensions with China to emerge as hottest luxury homes market globally

The absence of foreign homebuyers, including those from mainland China, in Australia’s property market has not prevented Sydney from copping the crown of being the world’s top prime property market, ... Read more »

Websites back up after brief global outage linked to Akamai

Many websites were briefly down in an outage sparked by a glitch in Akamai Technologies Inc’s systems, the second major disruption linked to the cloud company in about a month. ... Read more »

As floods hit Henan province, investors get respite with stocks spared from major sell-off

As Henan counts the huge economic damage from unprecedented flooding, stock investors are finding the market reactions far from disastrous as companies with operations in the central Chinese province ploughed ... Read more »

Debt-ridden electric vehicle maker Faraday Future loses Zhuhai government as a crucial investor ahead of US listing

Electric vehicle (EV) company Faraday Future failed to secure a crucial government investor ahead of its public listing in the United States, potentially crimping the debt-ridden carmaker’s expansion plans. The ... Read more »

Sin City Calling: How to book cheap flights to Las Vegas?

With the Coronavirus cases receding gradually and expensive fares no longer a roadblock for your next vacation, it's time to leave that couch behind and head out for a place ... Read more »

S. Korea's DHIC to invest additional $60 million in US-based NuScale Power

The investment in NuScale Power will enable Doosan Heavy to win more contracts to supply parts for SMRs. Doosan Heavy Industries & Construction Co. (DHIC) will invest US$60 million to ... Read more »

Korea Aerospace receives $240 million trainer jet order from Indonesia

 In 2012, KAI supplied 16 T-50 trainer jets worth $400 million. Korea Aerospace Industries Co. (KAI) has received a $240 million deal to supply six T-50 advanced trainer jets to ... Read more »

Luxury brands LV, Gucci, Balenciaga and Kenzo scramble to attract young S. Korean men

Luxury brands Louis Vuitton, Gucci, Balenciaga, and Kenzo are scrambling to attract South Korean men in their 20s and 30s, who are becoming major consumers. Louis Vuitton is opening another ... Read more »

Hong Kong’s MTR Corp should bear responsibility for shoddy construction at residential project, lawmakers argue

The MTR Corporation should be held responsible for a construction defect at a residential project atop a railway station in Hong Kong forcing the demolition of two blocks of flats, ... Read more »

HSBC, ICBC (Asia) among Hong Kong banks to stop offering mortgage loans for unfinished flats built by debt-stricken China Evergrande

HSBC, Industrial and Commercial Bank of China (Asia) and other major banks in the city have stopped offering mortgage loans for unfinished flats built by heavily indebted property developer China Evergrande ... Read more »

Melbourne's Intelli-Systems tapped to launch Schneider Electric's micro data centre-as-a-service in Australia

Melbourne-based UPS reseller and critical infrastructure solutions provider Intelli-Systems has launched Schneider Electric’s micro data centre-as-a-service in Australia. Developed specifically for the NSW Aboriginal Land Council, the offering provides micro ... Read more »

Hong Kong’s high business start-up cost fails to deter foreign companies seeking access to China’s breakneck growth pace

The high cost of starting a business in Hong Kong is unlikely to deter foreign firms from expanding into the city, because it serves as a gateway to the mainland ... Read more »

Tiffany & Co, Costco finally ends long-running lawsuit over counterfeit rings via settlement

Photo by: Rachael/Unsplash Tiffany & Co. and Costco reportedly settled their lawsuit that has been running for more than eight years already. The dispute between the companies was about some ... Read more »

Peloton unveils plans to venture into video game business

Photo by: Peloton/Facebook Peloton is a known American exercise equipment and media company based in New York City, and it seems that it is adding a new business to its ... Read more »

Taco Bell, Starbucks facing supply shortages

Photo by: Taco Bell/Facebook Taco Bell and Starbucks are reportedly hit with supply shortages. Based on the report, the popular chain outlets have notified customers that they are experiencing issues ... Read more »

Kia leads the auto market in S. Korea after recording an increase in city car sales

Photo by: Kia/Facebook Kia is leading in the Korean car market as its city car sales have increased. It was said that because more and more people are going for ... Read more »