US investors what are you doing to protect yourself from inflation?

pete6032

Diamond Member
Dec 3, 2010
6,241
1,802
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Inflation is 6.8% right now and my savings account is paying less than 1%. Need to keep some funds liquid of course but I'm not ready to jump into the stock market. Are you guys buying CDs, treasury securities, what?
 

brianmanahan

Lifer
Sep 2, 2006
22,777
4,219
126
i bonds from treasury direct is all i've got. you can only buy 10$k a year, but i've been moving some of my savings account to them over the years so i have a decent amount.

other than that i just use intermediate term bonds and know they'll probably take a slight hit. but if there's a crash, at least they won't drop %30-50 like stocks.

oh, and a little bit of gold.
 
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[DHT]Osiris

Lifer
Dec 15, 2015
10,619
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Buy stuff until the price difference between 1% and 6.8% is negligible.

Also spend more time cooking and less time caring about money.
 
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ultimatebob

Lifer
Jul 1, 2001
25,135
2,429
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I've given up investing in treasury bonds. With the yields as low as they are, you're basically losing money to inflation by holding onto them.

I'm still holding onto some higher yield corporate bonds, though. S&P 500 Index funds have become my default investment when I can't figure out where to put it otherwise, though. It seems that most mutual funds struggle to beat the S&P 500, so you might as well just own the benchmark instead of try to beat it.
 
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Red Squirrel

No Lifer
May 24, 2003
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Long term goal to live off grid which will eliminate pretty much all costs of living which keep going up each year, leaving me with less and less disposable income each year. The tricky bit is finding a source of income though but whatever that source is, it won't have to be as much as my current job, so the money is going to go much further. Then I can actually do proper investing.

My current investments are fairly paltry as I don't have much money left over to put towards it.
 

IronWing

No Lifer
Jul 20, 2001
64,371
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With inflation at 6+% and 15 year mortgage rates at below 3%, it seems the best way to protect your wealth is to go into debt up to your eyeballs 👀 and buy real estate or gold. No holding taxes for gold.
 

Exterous

Super Moderator
Jun 20, 2006
19,826
2,727
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i bonds from treasury direct is all i've got. you can only buy 10$k a year, but i've been moving some of my savings account to them over the years so i have a decent amount.

other than that i just use intermediate term bonds and know they'll probably take a slight hit. but if there's a crash, at least they won't drop %30-50 like stocks.

oh, and a little bit of gold.
Ibonds could potentially be problematic in the OPs situation since liquid was mentioned and they have interest penalties until several (3?) years of holding.

Depending on the dollar amount I'd probably just move it around for some bank account opening bonuses. Those will pay more than a CD or savings account unless you have a lot of cash sitting around

Longer term nothing is going to have a better chance of out pacing inflation like the stock market. VTSAX was up 25.71% for 2021 and 25.77% year over year for the past 3 years so a tad more than inflation
 
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ultimatebob

Lifer
Jul 1, 2001
25,135
2,429
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Long term goal to live off grid which will eliminate pretty much all costs of living which keep going up each year, leaving me with less and less disposable income each year. The tricky bit is finding a source of income though but whatever that source is, it won't have to be as much as my current job, so the money is going to go much further. Then I can actually do proper investing.

My current investments are fairly paltry as I don't have much money left over to put towards it.
Sounds like the Cheez investment strategy, although he might have taken it a bit too far :)
 

repoman0

Diamond Member
Jun 17, 2010
3,825
2,300
136
With inflation at 6+% and 15 year mortgage rates at below 3%, it seems the best way to protect your wealth is to go into debt up to your eyeballs 👀 and buy real estate or gold. No holding taxes for gold.
30 year was below 3% for a while too … I got a no fees refi in six months ago at 2.875 and paying ~20% less monthly than I was when I bought this place two years ago. My fiancee and I are going to buy our country / “retirement” home in the mountains up north soon as well. Most people wait until they’re 50-60 but we want to enjoy it for the rest of our 20s and 30s too.

Other than that we’re keeping it simple with around $50k in no/bullshit interest bank accounts and the rest in stock market index funds. No real need to over-optimize beyond that. At some point, we started to be lucky enough to have “enough” and it doesn’t add anything to our lives to try to get bigger numbers in a fidelity account somewhere. Strategy will have to shift of course as we get older but it works for now.
 

zinfamous

No Lifer
Jul 12, 2006
107,747
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Ibonds could potentially be problematic in the OPs situation since liquid was mentioned and they have interest penalties until several (3?) years of holding.

Depending on the dollar amount I'd probably just move it around for some bank account opening bonuses. Those will pay more than a CD or savings account unless you have a lot of cash sitting around

Longer term nothing is going to have a better chance of out pacing inflation like the stock market. VTSAX was up 25.71% for 2021 and 25.77% year over year for the past 3 years so a tad more than inflation
yeah, OP, just open a brokerage account and put it in VTSAX. It will always beat those laughable savings accounts and it's as liquid as you need it to be (well, what is it, maybe 2-3 days from selling shares and transferring funds between banks?), very similar to a savings account.

The value will move a lot of course, but it's still very stable compared to individual stocks, and if you ignore the wildish swings with the market, up 30%, down15%, up 3%, it will still always be worth more than your ~0.1% savings account.
 

ponyo

Lifer
Feb 14, 2002
19,687
2,794
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Heh - I'm assuming joking but just in case anyone is considering that - more than decent chance Erdogan does some sketchy shit with their economy which can tank your investment
Currency risk is huge and can wipe out any interest rate gains. Unless you live in Turkey, you have to convert the lira back to dollar, Euro, or whatever your native currency. That's the huge risk on top of Erdogan doing something stupid. We are truly blessed here in the United States that the world uses the dollar as the reserve currency.
 
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Red Squirrel

No Lifer
May 24, 2003
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Sounds like the Cheez investment strategy, although he might have taken it a bit too far :)
Pretty much, except I will actually own the land and probably build something bigger, and actually insulated. :p I don't know how he does it without much of anything for basics like running water or heat etc. I plan to still have all that stuff.
 

Charmonium

Diamond Member
May 15, 2015
6,659
708
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There's no need to make changes for some transient inflation. If you hold mostly equities, remember that companies can raise prices faster than you can meet them. Sure, if you're in a sector with a very elastic demand curve (very sensitive to changes in price) then you might have to make a judgement call about doing it at all and if so, where's the sweet spot such that you can increase prices but only so much that it doesn't hurt your profitability.

If you mainly own debt instruments, then at the very least try to set up a bond ladder. You'll still have capital losses but as each bond gets very close to redemption, it will (should) approach it's face value and since those capital losses were all paper rather than real, you should be OK. Bottom line though, if you think interest rates are going to go up in the longer term, you should really try to avoid bonds.

The one exception I can think of is junk bonds. These are valued mainly in relation to their stock price. So they trade more like equities than debt.

Right now I have about 3/4 of my money in stock with the rest in debt mutual funds or ETFs. But my stocks are mix between mutual funds (<1% in TOTAL admin fees). and I've been gradually dumping the individual shares.
 

Red Squirrel

No Lifer
May 24, 2003
62,893
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Stock market is in a huge bubble right now though. There's no knowing how long it will stay like that. Stock market can indeed be high return but it's also high risk. I mean, sure the price of silver/gold could maybe tank too but I think the odds of that are smaller as there is a real cost to mine/process it.

Not linking to image directly since there's swearing and don't think that's allowed, but thread here:

https://www.reddit.com/r/Wallstreetsilver/comments/ug7fvm
Ok, so that still shows the image anyway... oh well lol.
 

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