There’s no delicate way to put this; the US economy faces dire straits. Though we managed to moderately curtail the average inflation rate of eight percent reported in 2022, the current six percent rate of inflation (February 2023) doesn’t mean we’re out of deep waters. Moreover, a sustained period of growing product and service prices can herald another economic disaster, the recession. Still, you can discover imaginative (and daring) financial tricks and tips that will make you realize that inflation can’t stop you from earning money!
The two basic facts about inflation are that keeping your money in cash isn’t the brightest idea. Secondly, goods become more expensive. So why wouldn’t we benefit from rising prices? All we have to do is invest smartly during the inflation in such assets that will profit us.
In order to do so, we must locate the ideal investment opportunities that will stand a chance even against recession. High-yield stocks, inflation-indexed bonds, natural resources, real estate, and professional development are foolproof investments.
Real estate is synonymous with inflation-resistant investment.
Real estate offers a colorful variety and financially enticing options to make money during inflation. House-flipping and rental properties indeed have their fair share of ups and downs.
However, you can dodge the disadvantages by working with professional advisors, such as expert local realtors in your area, real estate attorneys, financial consultants, and lending institutions. Their expertise will guide you through the (only) seemingly complex investment process.
Limited but steady monthly income with (almost) risk-free REITs
Real estate is resistant to inflation because your ROI grows with rising prices. Right off the bat, we recommend investing in real estate investment trusts (REITs.) The term defines a company owning, operating, financing, and managing properties that can generate revenue through dividends. The advantage of investing in REITs’ publicly traded stocks is that you don’t have to purchase or be involved in property management.
Besides producing a stable monthly cash flow, transparency, and return in tune with risk, REITs are exposed to heavy taxation, housing market volatility, and somewhat reduced growth.
Be the landlord of your own rental property!
Why are so many investors attracted to the rental game? Because rents grow in synchronicity with inflation. So, rental property investors won’t take a hit once prices go haywire and the consumer purchasing power hits rock bottom. After all, everybody has to reside somewhere.
So, purchasing a second property and turning it into long-term rental real estate (for instance, single-family homes) or short-term rentals, like Airbnb or vacation cabins, has never ceased to be profitable. However, right up front, you must know that the interest rate for investment properties can be 0.75 percent higher than for first homes.
On the bright side, rental assets offer monthly dividends free of stock market unpredictability. On the downside, such an asset requires constant management, repairs, and facelifts, in a word, money to cover expenses. Plus, in the worst-case scenario, your tenants may be unable to pay the rent.
At first sight, selling a home during inflation is a sure success. Due to rising costs, you can sell your asset at a much higher price. Did you know one out of ten homes sold during 2020-2022 was a flip? Investors made an average of $67,000 per flip in the first quarter of 2022. However, the matter is far more complex than it seems.
Rising interest rates and decreasing asset prices have made house flipping in 2023 rather challenging. Many real estate investors keen on dipping their toes in flipping tend to forget two significant obstacles:
- They must invest considerable money into revamping their asset.
- Unpredictable costs will come out of the blue almost every time.
- No one can foretell real estate market trends for 2023 with 100 percent certainty.
Consequently, you must act cautiously before investing in an asset designed to flip later.
Dive into the world of bonds and stocks!
The US Treasury makes inflation-indexed bonds available for the great public. These government-issued bonds will systematically raise their yields as the inflation rate increases. Bonds aren’t susceptible to unpredictable market fluctuations; you can sell them quickly. However, you can’t purchase as much as you want, and if you redeem them way too soon, you may lose interest.
You might want to consider the “I Bonds” and the “Treasury Inflation-Protected Securities.” The first has at least a one-year holding period and a 25 Dollar minimum investment limit. Additionally, it regulates yields to inflation every six months.
On the other hand, you can buy securities from the United States Treasury. They have a minimum $100 investment cap. Still, you can sell them on security investors’ favorite platform, the secondary market, after 45 days.
Bet on value stocks!
Let’s not beat around the bush; the stock market retains its volatility in times of inflation. People can’t afford to buy products, services, and stocks in excess. For this reason, companies can’t pay substantial stock dividends to their shareholders. However, you can still pick winning “value stocks” and invest in well-established commodity manufacturers (agricultural or metal producers), gas and oil companies, bank stocks, and utilities.
Value stocks have a reduced risk factor and little to no investment minimums. Yet, you won’t hit the jackpot by purchasing such stocks because they don’t bring spectacular growth in returns. For instance, the dividend yield after “blue-chip stocks” ranges between two and three percent. Note that there are no foolproof stocks because each can experience price volatility. Which stocks trade the best in the first quarter of 2023? Try Mosaic Co, Applied Materials Inc., Halliburton CO., and Advanced Micro Devices Inc.!
Explore the more humanistic approach: invest in your skills!
Once you possess specific skills, no inflation, recession, or technical breakthroughs can stop you from earning decently and honestly! Because you become irreplaceable in your field! Come rain or come shine; pushing your limits and acquiring new knowledge and skills can bring you big bucks.
So don’t focus on expanding your talents in media, marketing, finance, customer support, technical writing, and banking! Instead, expand your knowledge on home repairs, vehicle, and innovative gadget services. Then, you might want to entertain a career in healthcare, education, or the tech industry.
Suppose you take the time and energy to learn new things. Then, you can save unnecessary expenses by performing specific tasks yourself. Secondly, you can be your own income-earning master. You won’t be afraid of real estate and the stock market fragility and fluctuations. Thirdly, you can amass a minimum amount of savings and invest in one of the abovementioned investments!
The inflation rate means that your savings of $5,000 accumulated in 2020 are worth much less in 2023 (more precisely, $4,700 at a six percent rate of inflation.) investing in inflation-indexed bonds, stocks, real estate, mortgage-backed securities, collateralized debt obligations, etc., offers an excellent way to make money despite the economic decline. Moreover, they offer far more extensive financial protection than keeping your cash in a bank account or under a pillow.
Suppose you’re fascinated with real estate just like us. In that case, the best course of action would be to reach out to professional local real estate agents. They can locate the best starter investment properties in your area with the greatest return on investment percentage!