How To Prepare Yourself For Inflation? – Inflation Protection Strategies

Inflation is quite frightening! Retail investors and the country’s citizens fear rising prices. You must be wondering, why we’re talking about inflation all of a sudden? Yes, inflation is not very close at least not in India. But, seeing its existence, it is important to acknowledge and prepare for it. Or you may never know when it will hit you?

Nobody wants to see a rise in gas and food prices. And with new tariffs, other things will rise up too. Thus, we would like to share some inflation protection strategies so that you can fight inflation and get ahead of it.

How to Prepare for Inflation? – 5-Easy Steps

Before we start discussing the inflation protection strategies first you need to understand the inflation rate in India. As of now the annual inflation rate in India declined to 2.05 percent in January from 2.11 percent of last December. You may not know but it is the lowest inflation rate since June of 2017 as Food Prices continued to decline.

Speaking of food prices, the thing is inflation is personal. It hits every person differently. For instance, if you don’t drive a car then the rise in oil prices doesn’t matter to you. If you are single or have a small family then food prices isn’t a big deal.

So, published inflation rates are just informative and may or may not apply to your situation. The annual inflation rate is calculated with 12-month data of the Bureau of Labor Statistics Consumer Price Index (CPI).

Now let’s talk about the steps as we said to discuss:

1. Inflation means rising prices. In case it happens many goods and services increased in prices. When the price is rising, try to stock up the necessary things as much as possible. Make sure you use a disciplinary approach and stock up to the goods that are available at the cheapest price.
2. When inflation comes, the stock prices go down in general. When that happens, don’t panic! If history has taught us anything is that the longer you keep your money in the market, the higher the returns you can expect from your stock investments.
3. During the inflation period, the debt funds and real estate considered good investment options. It is because stock prices go down. When that happens retail investors stop investing in the stock market and switch to other important investment options such as debts and real estate. Thus, if you are planning to invest in another avenue then real estate and debts are quite good to invest in.
4. Another way to protect yourself and your capital against rising inflation is to look for government inflation-protected bonds which offer a great deal in protecting capital against inflation.
5. Last but not least, invest in commodities! It has seen that whenever the stock market plunges the commodity market boom. To better use of your capital, you can include commodity in your portfolio to protect your investments against inflation.

Overall, if the inflation is going to blow up, then it would be wise to leverage as much as we can right now.