Best Investments for High Inflation

the fed has said they want inflation so what do you do how do you invest what do you do with your money if you know inflation is coming i've got four tips coming up [Music] my name is mike bernard i'm the host of the wise money show i'm also one of the certified financial planners right here at core horn financial group welcome to this channel make sure you hit that subscribe button turn on notifications and smash that thumbs up button all right so the fed has come out and said hey enough with these low interest rates and this low inflation averaging less than two percent actually which is their target we want inflation we need a flexible target and we're okay with an average inflation of two percent and because current inflation's below 2 we've got to get higher so what do you do what do you do if we're going to see inflation let me tell you what legendary investor stanley drunkenmeyer has said he says he's actually very very yep two varies you know it's serious worried about the next three to five years he actually thinks we could see five to ten percent inflation in that time because of what the fed is doing that is crazy that's crazy if you think back over the next 10 even 20 years you might say inflation what's to worry about guys just a couple decades ago that was the number one financial concern out there was inflation in inflation being too high overheating and the fed has has done nothing but said we promise to make sure we keep inflation under control it won't get too out of hand i don't i mean how how much can you trust them do you do you believe that all of their all of their policies will work so anyway i'm not i'm not going to speculate about whether inflation gets way overheated and and overwhelming but instead i want to ask a more simple question what should you do with your money with your dollars with your investments if we're entering a phase where inflation actually might be real might be higher than what we've seen in the past what do you do what does well in inflation i've got four ideas for you the number one thing that i would tell you you're not going to want to hear stocks actually do very well in inflationary times why because the stock market is the value of companies it is the value the s p 500 is the aggregate value market value market cap determined by traders every single day of what is the overall value of the 500 largest companies based in the us so if we've got inflation that means costs are going up and if costs are going up that means revenues are going up hopefully profit profits are staying in sync with inflation as well that means companies are worth more because there's inflation companies are worth more and if companies are worth more what does that do to the stock market makes the stock market go up i mean it's as that's as logical and and as linear as you can make it now will it be a nice steady flat ride no of course not it's stocks it's volatility i told you that uh that the the stock market's the aggregate opinion of the valuation of the 500 largest companies based in the us determined by traders each and every day well each and every day there are millions of people saying this company's actually worth this no it's worth this and they bid and they trade against each other to determine a flowing price so it's going to be very volatile but if we plot if we if we put a pin in today and we put a pin in five or ten years from now and during that time if we have higher than normal inflation stocks should do okay all right now right now is some of that already priced in is that why stocks have surged and we're at threatening p e levels maybe maybe i am nervous about how elevated the stock price the stock market is right now compared to earnings we might have gotten we might have borrowed too much of future expectations in setting today's prices it's very possible but but during inflationary times stocks tend to do well that's the first one the second one is also quite linear as well during inflationary times real estate does well real estate does well so again inflation at its at its very core is prices go up prices are higher well the price of what the price of lots of goods and services and and so on but yes the price of real estate whether that's an office building or whether that's a house or an apartment building or a uh or a condominium right real estate tends to do well during inflationary times the value of that asset likely gets bid up due to inflation but you guess what else does rent rent does as well so rental real estate your rental prices your rental rate might go up making that rental property worth more for office buildings for malls now those are going to be empty for strip malls no those will be empty too but for commercial property those rents will go up with inflation and that makes those uh those properties worth more as well so if you own real estate you you should see those values go up now if you own real estate as an investment not just your primary residence but if you own real estate as an investment whether that's a real estate mutual fund that you own in your portfolios like we do um or whether that's some sort of rental real estate property you own a property of portfolios that you own maybe some commercial properties you should see again not in a linear fashion but if we do see rising levels of inflation over the next five ten years then we should see real estate as for each of those investments your primary house your real estate investment mutual fund your rental real estate any commercial real estate you should see those appreciate in value as well the asset go up in value and any income that you're getting that mutual fund the rental property that commercial property that income should go up as well keeping pace with inflation that's the second idea now the third idea if we have uh if we're entering into a time of higher inflation and that is the very very very boring treasury inflation protected securities often known as tips now treasury inflation protected securities at right now at this hey everything's either going to be great in the economy or a we could see a financial apocalypse in that scenario depending on which side you gravitate towards more you might like the comfort of having some government-backed investments well you know government-backed investments right now they're paying nothing they're paying nothing what is it 80 some percent of bonds being issued today are paying less than two percent that's outrageous it seems like i was just on uh on the radio bragging about how you can actually get interest in your savings account now i checked my i checked my high interest savings account which was just paying two percent a few months ago it's now paying a half a percent that is that's that's disastrous that's embarrassing especially if we're going to see inflation over two percent right so treasury inflation protected securities that's the watch the grass grow watch the paint dry sort of investment but the interest or or there should be an adjustment made to that investment if we see inflation going up guess what we've already seen tip investments skyrocket in value this year i checked our tips investment that we use for our models here and again it's not in our it's not in our momentum strategy it's not in dynamic because there's not a lot of momentum happening in in bonds right now the momentum is intact it's in growth but in our core strategies our strategic strategies the more indexed type of approach diversified buy and hold our our inflation protected security fund is up eight nine percent which is just astounding so if we're going to see higher levels of inflation and you want a more conservative or less volatile approach but not get clobbered by inflation treasury inflation protected securities or tips should do well all right so stocks do well equities do well in inflationary times real estate definitely does whether you own it um just as an asset or you own it for income chips treasury um and inflation protected securities and then the last one believe it or not yes gold gold and and silver tend to do well during inflationary times the struggle that i have with gold is there's some empirical value but i there's no calculatable value i i can't tell you mathematically what the value of gold is today versus what it should be tomorrow um i can tell you that the the current price of apple stock for example or even winnebago or whatever i can tell you how that value is derived based on the revenue and the profits of that company and the expected profits and the dividends all of that jazz i can mathematically derive a value of apple and then i can compare it to what the stock market is trading apple at and say this is a good value or not i can't get there with gold i can't however when goods and services cost more i.e inflation typically that means gold gold and silver will cost more and so holding gold or silver those precious metals should actually do well during inflationary times what about all commodities possibly possibly in aggregate the answer is yes but individually it might be no because there's a lot of other factors will oil actually will gas and oil will it actually keep up with inflation or will we be pivoting will we be substituting away from that natural resource into alternative forms of energy and therefore oil even during inflationary times will not do well i don't know i don't know but overall gold silver should do well commodities do as a general basket do tend to do well so there you have it if we are entering into a more inflationary time if stanley drunk and my legendary investment investor is is right and we should be afraid of overwhelming inflation then these are your four options you got equities you've got real estate you've got tips and you've got gold silver so my question for you then as we look to apply is well then do you jump in each of these right now if you look at each of these two i mean to the penny they're all extremely extremely high valued today the the stock market as a multiple is at trading is trading at 20-year highs real estate we are i'm i i'm i almost at a bubble real estate prices are extremely high we have a housing boom right now i told you how our tips our tips index is up eight nine percent year-to-date and gold is threatening it's knocking on the door at two thousand dollars its highest price ever each of these assets investors have gotten ahead of this and said well if we're going to see inflation we're bidding prices up today so should you jump into these investments make sure that your overall investment approach is connected to your financial plan each of these they might already bid up and if inflation isn't as high as what stanley thinks then these investments could plummet could not do so well so make sure you're managing risk and your investment approach is connected to your overall financial plan contact your cfp to make sure you're taking the right level of risk you need a cfp you need a second opinion reach out to our team at corehorn financial group corehorn.com that's core horn with the k wisemoneyshow.com you can find us there as well or send us an email info corehorn.com all right there you have it go out and take your next y step in your financial life you

Channel: Wise Money Show

Views: 150,066

Keywords: inflation investing, federal reserve, inflation and stocks, what to invest in during inflation, investing during inflation, inflation investing strategies, how to hedge against inflation, best investments for high inflation, best inflation investment, best investments for inflation, tips bond, high inflation stocks, investing high inflation, tips bond e, real estate investing, inflation and stock market, treasury inflation protected securities, tips explained, fed inflation

Id: xMFiRmEhNDE

Length: 12min 25sec (745 seconds)

Published: Wed Sep 16 2020