4 ways to inflation-proof your wealth

Posted on: 31st March 2022 in Financial Planning

“How to inflation-proof my wealth against inflation?” is one of the top questions you should ponder these days. The coronavirus pandemic brought severe restrictions that put a strain on the global economy in 2020 and 2021. As the world looked forward to starting 2022 on better terms than before, the war clash between Russia and Ukraine brought more uncertainty and inflation jump in most countries.

As stimulus packages have given their place to supply shortages and price increases, this blog intends to provide you with some ideas on how to hedge your funds against the impact of inflation. Before starting, we’d like to stress that it is always better to seek professional advice from fully qualified financial advisors such as the ones at Holborn.

Investing in property

Brick and mortar seem that will always be one of the best additions to any investment portfolio, regardless of the financial conditions. Real estate investments are a great way to build a diversified portfolio against inflation.

Although some believed that the pandemic would keep housing prices low, this did not materialise. On the contrary, property prices rose almost everywhere in the UK, Europe, the US, Australia and the Middle East. The need for property buyers for real estate in suburban or rural areas was even more unpredictable. Working from home requires space and a peaceful environment for professionals. As a result, the average apartment in London or Dubai didn’t qualify for the new status quo.

Combined with low-interest rates, housing prices jumped and continue to rise, hitting new record highs. As banks do not offer high yields for savings accounts, you could check out which properties are available in the market and perhaps decide to invest in them. Property values go up so maybe it is time to ride the wave. Property remains one of the safest investments to consider.

Gold versus inflation

Almost every investment advisor will tell you that gold is one of the safe havens for experienced investors. Gold demand increases in times of financial uncertainty. As a consequence of the demand and supply rule, gold prices surge. Gold is a tangible asset and purchasing it to secure part of your funds against a higher rate of inflation is one of the oldest tricks in the book of finance.

When things get calmer, investors sell gold and take back the money they have invested, depending of course on the price they have sold it. Therefore, adding some gold to your portfolio is probably an idea you have to explore with your adviser. We should note that commodity prices have risen in the last few months with nickel, palladium and others rising above expected levels. Some of these metals are vital parts needed to produce electronics and other essential products, which means that the demand is likely to be high and the investment risk low.

Investing in energy

Energy is what makes the world go around. Whether it is electricity, gas, the sun or the wind, energy remains the Holy Grail for every company and state that wants to fuel its production lines. The low costs of energy marked the years of the pandemic since a large part of the planet’s population stopped going to work or travelling for holidays so the demand dropped.

As the world went slowly back to normal and people started using their cars and other means of transportation, the cost of energy started increasing as economists had anticipated. What hadn’t been anticipated was the extreme price surge of almost every type of energy that derailed worldwide inflation. Central banks felt that high energy costs would hurt global economic growth, so they are taking steps to tighten their monetary policy.

The conflict in Eastern Europe seems to drive oil prices even higher. Although energy-producing companies planned to shift their production from fossil fuel to renewable energy sources, oil prices rebounded. New market conditions may create an attractive investment opportunity for investors that would like to add assets like these to their portfolios. If you feel that you lack the knowledge to make the correct investment choices, we recommend working with a fully qualified financial adviser who will be able to identify opportunities for you.

Financial planning and self-improvement

Inflation has a negative effect on your cash savings. Stock markets fluctuate depending on the circumstances. Navigating financial markets isn’t an easy task when you are busy with your everyday life. However, your available budget becomes smaller as prices rise. Financial planning is the answer to your problem. With the help of an experienced professional, you can design a plan which will include safeguards that will protect your wealth from most inflationary spikes.

Another idea that would help you inflation-proof your wealth is self-improvement. Warren Buffet has said that “if you’re the best teacher, if you’re the best surgeon, if you’re the best lawyer, you will get your share of the national economic pie regardless of the value of whatever the currency may be.” Since one of the most famous investors in the world speaks about the value of qualifications, there is no reason why you should ignore his piece of advice. See how you can add new qualifications to your CV, and finding new jobs with better salaries will never be a problem for you.

Reducing inflation risks with Holborn

Some economists suggest that long-term investors should pay attention to the fact that economic cycles have stages where either high or low consumer price inflation is recorded. Price stability is one of the targets of central banks around the world and for this reason, they will be adjusting their monetary policies. However, the results are not going to be felt right away.

There are several financial assets that you can review and inflation-proof your wealth if you find them suitable for your strategy. With smart and well-calculated investment decisions, your purchasing power may remain intact or even increase in periods of high inflation.

If you’d like to build a financial plan to hedge your funds against inflation, we suggest getting in touch with our experienced and fully qualified financial advisers. With over 20 years of presence in Dubai and more than 13 offices across the world, we are well placed to help you make informed decisions that would help you achieve your financial goals. Don’t hesitate to contact us today by filling in the contact form, and one of our advisers will be right away by your side.