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Headline inflation has eased in the U.S., but according to economist and former Treasury Secretary Larry Summers, soaring prices may not be over — especially in light of Donald Trump’s recent presidential election victory.
Speaking at a New York Economic Club, Summers cautioned that Trump’s proposed policies could drive inflation even higher than the levels triggered by his predecessor’s actions.
“There is a very substantial risk that the president will attempt to implement what he talked about. If he does, the consequences are likely to be substantially greater inflation than what was set off by the excessive Biden stimulus,” Summers suggested, according to a recent CNN report.
He also looked to the U.S. Federal Reserve, which recently announced a second consecutive cut to its benchmark interest rates.
“My own judgment is that the Fed and markets are still underestimating the overheating risk,” he wrote in a post on X.com. “I ask myself: Why is cutting rates a priority into that environment?”
In October, the U.S. Consumer Price Index recorded a 2.6% annual increase, a significant drop from its 40-year high of 9.1% in June 2022.
Still, Summers remains vigilant, warning, “I am fearful that the Fed is going to be more like once burned, twice burned, rather than once burned, twice shy, on inflationary risks.”
Inflation impacts everyone by eroding the purchasing power of money. If you share Summers’s concerns, here are three strategies to guard against its impact.
Real estate
Real estate has long been considered a reliable hedge against inflation, thanks to its intrinsic value and income-generating potential.
When inflation rises, property values often increase as well, reflecting the higher costs of materials, labor and land. At the same time, rental income tends to go up, providing landlords with a revenue stream that adjusts for inflation. This combination makes real estate an attractive option for preserving and growing wealth during periods of escalating price levels.
Over the last five years, the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index has surged by more than 50%.
You can invest in real estate by purchasing rental properties and becoming a landlord. Alternatively, crowdfunding platforms like Arrived have made it easier for average Americans to invest in rental properties without the need for a hefty down payment or the burden of property management.
With Arrived, you can invest in shares of rental homes without worrying about mowing lawns, fixing leaky faucets, or handling difficult tenants. The process is simple: browse a curated selection of homes that have been vetted for their appreciation and income potential. Once you find a property you like, select the number of shares you’d like to purchase, and then sit back as you start receiving rental income deposits from your investment.
Gold
Gold is another popular hedge against inflation. The reason is straightforward: the yellow metal can’t be printed in unlimited quantities by central banks like fiat money. And because its value isn’t tied to any one currency or economy, gold could provide protection during periods of economic uncertainty. This unique characteristic has earned it the reputation of being a “safe haven” asset.
When inflation erodes the purchasing power of fiat currencies, gold’s appeal as a stable store of value often grows, driving up demand.
Investors have already taken note of its resilience. So far in 2024, gold prices have surged by 27%, surpassing $2,600 per ounce.
One way to invest in gold that also provides significant tax advantages is to open a gold IRA with the help of American Hartford Gold. Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, thereby combining the tax advantages of an IRA with the protective benefits of investing in gold, making it an attractive option for those seeking to ensure their retirement funds are well-shielded against economic uncertainties.
When you sign up with American Hartford Gold, you’ll be eligible for an offer to receive up to $15,000 in free silver, along with the assurance of the best pricing through their price match guarantee.
Contemporary art
It’s easy to see why great works of art tend to appreciate — especially during times of inflation. Supply is limited, and many famous pieces have already been snatched up by museums and collectors.
Investing in art was traditionally a privilege reserved for the ultra-wealthy.
In 2022, shortly after inflation reached a 40-year high, the art collection of late Microsoft co-founder Paul Allen sold for a total of $1.5 billion at Christie’s New York, making it the most valuable private collection of all time.
Art is also a popular way to diversify because it’s a tangible physical asset with little correlation to the stock market. According to Masterworks, postwar and contemporary art prices have outpaced the S&P by 64% (1995-2023).
Masterworks is a platform for investing in shares of blue-chip artwork by renowned artists including Pablo Picasso, Jean-Michel Basquiat, and Banksy.. It’s easy to use, and with 23 successful exits to date, every one of them profitable.
Simply browse their impressive $1 billion portfolio of paintings and choose how many shares you’d like to buy. Masterworks will handle all the details, making high-end art investments both accessible and effortless.
Masterworks has already sold roughly $45 million worth of art, distributing the net proceeds to everyday investors. New offerings have sold out in minutes, but you can skip their waitlist here.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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