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Ask HN: How do you hedge against inflation?

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Re: Ask HN: How do you hedge against inflation?

#2

Post by PaulHoule »

I got inflation indexed bonds in 2000 around the time they spiked interest rates to kill the bubble.

https://www.treasurydirect.gov/indiv/products/prod_tips_glan...

Despite inflation being moderate the whole time these went up in value a lot, more than I expected based on the interest rates.

My broker fired me because I went to a sales presentation and argued with a salesman about I bonds being a good investment relative to the annuities they were pushing.

TIPS might be a good idea now.

Re: Ask HN: How do you hedge against inflation?

#3

Post by Bostonian »

In the U.S. there exist Treasury Inflation-Protected Securities (TIPS). You could buy STIP, the iShares 0-5 Year TIPS Bond ETF. The UK also has inflation-indexed bonds. Gold is another possible hedge. Maybe oil and gas stocks, since energy prices rise during high inflation.

Re: Ask HN: How do you hedge against inflation?

#8

Post by giantg2 »

Since you mentioned hedging, I'm going to skip over the TIPS/bonds others have mentioned. Those will protect that invested money against inflation but they don't provide any significant returns at current rates, and thus cannot act as a good hedge for your entire (diversified) portfolio.

You could look into industries or sectors that stand to benefit from inflation. I'm not sure if there's a good list of these. I would imagine certain commodities, REITs, materials, or consumer defensive could be good candidates. Companies with a lot of debt that have locked in low interest rates on that debt can also be attractive depending on the other factors in how that debt is structured.

An obvious suggestion for many people is to have a fixed rate mortgage and not pay it off early. Property values have been rising and will likely continue that longterm trend. If I have a 3% mortgage, then inflation last year essentially made me 4.2% since the value that the monetary balance represents has been reduced.

These are just my general thoughts and should not be considered advice. These thoughts might not be applicable to everyone.

Re: Ask HN: How do you hedge against inflation?

#9

Post by giantg2 »

999900000999 wrote: post #7

Is anyone not losing money right now ? I checked one of my 401ks, and I'm down like 5% this year. Checked some other funds and everything has lost money. Previously I wanted to buy a home, but I also hate the notion of being trapped in one place

The market as a whole is down. People who picked specific companies or sectors might be up. Although it's likely they wouldn't be well diversified to have avoided the overall market effects. Also, look at your performance over multiple years. Of course pullbacks will happen, but my guess is that you're still 10%+ over the past 2-3 years.

The way interest rates are going, it could be costly to buy a home if you wait. Although jumping into such a hot market isn't great either. Basically, it'll suck either way.

Re: Ask HN: How do you hedge against inflation?

#10

Post by bratak »

Invest money in so called "Inflation Stocks".

These are stocks, which grow in times of Inflation.

It's simple: Just ask yourself, what will rise in price in inflationary years.

- oil, gas, food...

Or go to a stock screening portal, and filter out the best 3 Industries. There, look for the best 1% rated/performing stocks.

Even better, if you are trading stocks, learn the follwoing, and in a view years, you can use the stock market like an ATM: Stan Weinstein, Stage Analysis.

You will not get rich quick, but probably very wealthy in the future.

Hope this helps

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