Inflation is Coming - How Will it Effect Your Investments?
Over the last 6 months, the United States Government and Federal Reserve have pumped literally Trillions of dollars into the economy with the various tools they have available to them.
This is great for the short term recession.
The more money out there, the more money that is spent, made, and recycled, growing our economy.
The problem is what happens when the economy is better, and all this extra money is circulating amongst us? Inflation happens, and it could be bad.
In preparing for a possible rise in the Inflation rate which could rival that of the 1970's, you should know how it will effect your investments.
Bond Prices: As Inflation rises, the price of older bonds will decrease in value since their rate of return will likely be under, or just barely over the rate of inflation.
If you are holding bonds before the inflation rate increases, you will likely lose money.
On the other hand, buying longer term bonds at the peak of an inflationary period can lock you into a rate that will be high once inflation subsides.
Gold Prices: If you were to invest in one area before an inflationary period I would recommend Gold.
Gold is probably one of the biggest reactors to Inflation.
As inflation rises, currencies deflate, thus meaning that to buy 1 ounce of gold will cost you more.
Some speculate gold could see $2000 an ounce within a few years.
I think it's possible.
Cash: It's OK to have cash on hand before inflation, but once inflation peaks, you will want to find a place to invest it with a high interest rate.
Don't get locked into a long term CD at your bank before inflation strikes.
Other investments include stocks, which are not affected too much by Inflation, Homes, which are great investments in time of inflation, and Commodities which also shine brightly during inflation.
As always be careful with your money, and diversify your investments.
This is great for the short term recession.
The more money out there, the more money that is spent, made, and recycled, growing our economy.
The problem is what happens when the economy is better, and all this extra money is circulating amongst us? Inflation happens, and it could be bad.
In preparing for a possible rise in the Inflation rate which could rival that of the 1970's, you should know how it will effect your investments.
Bond Prices: As Inflation rises, the price of older bonds will decrease in value since their rate of return will likely be under, or just barely over the rate of inflation.
If you are holding bonds before the inflation rate increases, you will likely lose money.
On the other hand, buying longer term bonds at the peak of an inflationary period can lock you into a rate that will be high once inflation subsides.
Gold Prices: If you were to invest in one area before an inflationary period I would recommend Gold.
Gold is probably one of the biggest reactors to Inflation.
As inflation rises, currencies deflate, thus meaning that to buy 1 ounce of gold will cost you more.
Some speculate gold could see $2000 an ounce within a few years.
I think it's possible.
Cash: It's OK to have cash on hand before inflation, but once inflation peaks, you will want to find a place to invest it with a high interest rate.
Don't get locked into a long term CD at your bank before inflation strikes.
Other investments include stocks, which are not affected too much by Inflation, Homes, which are great investments in time of inflation, and Commodities which also shine brightly during inflation.
As always be careful with your money, and diversify your investments.
