Despite a decrease in headline inflation in the United States,economist and former Treasury Secretary Larry Summers warns that skyrocketing prices may not be over yet. Summers attributes this concern to Donald Trump’s proposed economic policies, which he believes could raise it beyond the levels caused by his predecessor’s actions.
The Risks of Trump’s Economic Policies
Summers warns that Trump’s policies, including tax cuts, deregulation, and large government spending, could lead to higher inflation and destabilize the economy. The Federal Reserve’s decision to lower interest rates may also underestimate the risk of overheating. “In my opinion, the Fed and markets continue to underestimate the risk of overheating,” Summers wrote in an article on “I wonder why lowering rates is so important in that setting.”
The Impact on Consumers
It erodes the purchasing power of money, affecting everyone. To protect your wealth, consider investing in assets that historically perform well during periods of inflation, such as real estate, gold, and contemporary art. These assets have intrinsic value and can provide a hedge.
Three Strategies to Guard Against Inflation :
1. Real Estate
Investing in real estate can provide a hedge against inflation. Property values and rental income tend to increase with inflation, making real estate a reliable investment. You can invest in rental properties directly or through crowdfunding platforms like Arrived. Arrived allows you to invest in shares of rental homes, providing a steady stream of income without the burden of property management.
2. Gold
Gold is another popular hedge against inflation. Its value is not tied to any particular currency or economy, making it a reliable store of value. You can invest in physical gold or gold-related assets through a gold IRA. Preserve Gold, a leading precious metals dealer in North America, offers gold IRAs with no fees for the first five years and a price match guarantee.
3. Contemporary Art
Contemporary art is a tangible asset with little correlation to the stock market. Investing in art can provide a hedge and diversify your portfolio. Masterworks, a platform for investing in shares of blue-chip artwork, offers a unique opportunity to invest in art. With Masterworks, you can browse their impressive $1 billion portfolio of paintings and choose how many shares you’d like to buy.
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The Benefits of Investing in Art
Investing in art can provide several benefits, including:
– Diversification: Art has little correlation to the stock market, making it a reliable diversification strategy.
– Inflation protection: Art values tend to increase with inflation, providing a hedge.
– Tangible asset: Art is a tangible asset that can be held and appreciated.
Mitigation of Inflation
To mitigate the impact, consider investing in assets that historically perform well during periods of inflation, such as real estate, gold, and contemporary art. These assets have intrinsic value and can provide a hedge against inflation. By diversifying your portfolio and investing in these assets, you can protect your wealth and achieve your long-term financial goals.
