How to protect from inflation?

[adriaparcerisas]

Hello community,

I want to start a topic that I think is interesting for the immediate future of cryptocurrency investors, the inflation. One of the consequences of the global pandemic we are experiencing seems almost certain to be the injection of money into the world's economies at levels never seen before. This will undoubtedly lead to an increase in inflation.

I leave you the link (https://www.docdroid.net/H1fuimX/the-great-monetary-inflation-pdf) to a paper by a very well known and knowledgeable on the subject that talks about the performance of Central Banks and different ways to protect our assets against possible inflation. In my opinion there are very coherent things that are worth knowing. It is true that I personally disagree on some points but in general, I think it will be useful for everyone. Here is an image of the ways to protect our assets that Mr. Tudor Jones talks about in his article:

 


I think you might find it interesting and helpful. I hope you find it useful and give your opinion on the subject.

[Poker Player]

Since we are in a Bitcoin forum, it is normal to think that the best protection against inflation is Bitcoin. And it is not that it is (only) a distorted thought, the (short) history of the Bitcoin proves it to us.

Then there are other things that are debatable. Gold today is not bad, but if most of the money that is invested in gold goes to Bitcoin, it will not serve to protect much. That's what has happened this past year.

NASDAQ 100, OK. I prefer the S&P 500 which is more diversified in sectors. The NASDAQ 100 has been more profitable than the S&P 500 in recent years but that can change at any time.

Then I also miss good, well-located, Real State on that list.

[Kong Hey Pakboy]

Banks are a good protection to inflation but the problem is there is close to zero profits with banks so it's not a good thing to go that route for inflation protection, bitcoin can be a likely candidate but it's inherent volatility is going to be a problem for people that have weak hands. Real estate and gold could do the work just fine but the problem is that both are really expensive.

[paxmao]

The classics against inflation are physical goods and assets. Namely, these are:

- Gold and other precious metals. Gold is more stable, but palladium, platinum and others work well.
- Real state. It does not get more "real asset" than this. Land has a multi-millennial tailwind due to population growth.
- Art and other alternative assets.
- Commodities other than metals.

As we all know, bitcoin can also act as a defence against inflation, but only when considered long term or hyperinflation due to its inherent volatility.

[Strongkored]

I believe that there will be many answers Bitcoin is, that understandable because this is a forum about Bitcoin, but it will only run properly if we do it for the long term, gold and stock can also be chosen to protect from inflation

Banks are a good protection to inflation but the problem is there is close to zero profits with banks so it's not a good thing to go that route for inflation protection

We cannot protect from inflation with just by putting money in the bank, the amount will remain the same but the value will decrease as inflation increases.

[Hydrogen]

Inflation protection normally implies investing and holding assets that appreciate in value, at a greater rate than inflation depreciates wealth.

If inflation is 3% per year. We must invest in assets that payout 3% in annual percentage yield just to break even.

What complicates matters is inflation protection assets generally being in high demand during recessions or eras defined by high fiat printing, when inflation becomes a real concern. Every financial crisis and recession has its own unique identity and persona.

The current era is a very difficult one to find legitimate inflation protected assets in. Commodities like gold, silver and oil. Bonds and bitcoin. Everything is under siege, being devalued or under some type of attack at the moment. Economists and financial gurus are scratching their heads wondering why the price of gold and silver are not climbing. Bitcoin likewise could consistently be appreciating in value as an inflation protected asset.

The big question is: where should people put their money to protect it from inflation in 2021. There are no easy answers to this question that I know of. Circumstances are difficult everywhere.

[a.a]

Inflation is per se not a bad thing. If you live in a country with 1-2 % inflation, then it is used to "force" people to invest reasonably. It is actually motivating the economy to invest.

If you live in a country were the inflation is negative, like Japan, it means that the people are holding their savings, in the hope that it will get more value over the time. Thus killing the economy, as the private sector is the actual engine of the economy.

If you live in a country were the inflation is very high, like 40%, it means that the people have to earn more and more money to buy less and less stuff. Thus killing the economy by having no way for companies to save money for bigger investments, demotivating the banks in giving credits with reasonable interest. Thus making the owners of gold and land etc.. de facto richer and richer.

And to be honest... if you think a little bit out of the box, then paying Gas money on Eth or the fee on bitcoin transaction or simply the constant unlimited mining like AltCoins of Doge to be the equivalent of inflation, as it is constantly devalueing the currency you have.

[Kittygalore]

Banks are a good protection to inflation but the problem is there is close to zero profits with banks so it's not a good thing to go that route for inflation protection, bitcoin can be a likely candidate but it's inherent volatility is going to be a problem for people that have weak hands. Real estate and gold could do the work just fine but the problem is that both are really expensive.

I think that gold and real estate is the best hedge for inflation followed by stocks and bitcoin and I don't like that you mention banks because they aren't client friendly and they have a lot of paperwork to do but give a meager interest. I do agree that bitcoin isn't a good hedge since the volatility is pretty high.

[Mauser]

Banks are a good protection to inflation but the problem is there is close to zero profits with banks so it's not a good thing to go that route for inflation protection, bitcoin can be a likely candidate but it's inherent volatility is going to be a problem for people that have weak hands. Real estate and gold could do the work just fine but the problem is that both are really expensive.

I think that gold and real estate is the best hedge for inflation followed by stocks and bitcoin and I don't like that you mention banks because they aren't client friendly and they have a lot of paperwork to do but give a meager interest. I do agree that bitcoin isn't a good hedge since the volatility is pretty high.

I agree with you, savings accounts at a bank are not very attractive  at the moment. For the last 5 years at least was the interest rate on the savings account below the inflation rate. On top of that are the bank fees rising. In my opinion going for banks is not a very attractive investment at the moment. The only real alternative are TIPS but these are treasury bonds and not really from the banks itself. So going for Gold and Crypto Currencies is the best way to protect ourself from inflation in my opinion.

[arwin100]

Banks are a good protection to inflation but the problem is there is close to zero profits with banks so it's not a good thing to go that route for inflation protection, bitcoin can be a likely candidate but it's inherent volatility is going to be a problem for people that have weak hands. Real estate and gold could do the work just fine but the problem is that both are really expensive.

I think that gold and real estate is the best hedge for inflation followed by stocks and bitcoin and I don't like that you mention banks because they aren't client friendly and they have a lot of paperwork to do but give a meager interest. I do agree that bitcoin isn't a good hedge since the volatility is pretty high.

I agree with you, savings accounts at a bank are not very attractive  at the moment. For the last 5 years at least was the interest rate on the savings account below the inflation rate. On top of that are the bank fees rising. In my opinion going for banks is not a very attractive investment at the moment. The only real alternative are TIPS but these are treasury bonds and not really from the banks itself. So going for Gold and Crypto Currencies is the best way to protect ourself from inflation in my opinion.

Well if you let your money sit on the banks then we can expect that we will be affected on inflation since provably the returns given by the bank for over the years is so small compare to the market flux happening, but if your kinda right if you invest your money in profitable areas well possibly you cannot feel the inflation since your money is earning decently with those kind of investments you choose.

[Vishnu.Reang]

I agree with you, savings accounts at a bank are not very attractive  at the moment. For the last 5 years at least was the interest rate on the savings account below the inflation rate. On top of that are the bank fees rising. In my opinion going for banks is not a very attractive investment at the moment. The only real alternative are TIPS but these are treasury bonds and not really from the banks itself. So going for Gold and Crypto Currencies is the best way to protect ourself from inflation in my opinion.

That is not surprising. Because the argument is that you need to pay fee on the services that the bank is providing to you. They are storing your money and providing you access to debit cards and ATMs. That is the reason why the savings interest rate is much below the annual inflation rate. Nowhere in the world, you will find savings interest at a rate that is above the prevailing inflation rate. And in countries such as Japan, they have started to implement negative interest rates (which is not surprising, given the very low inflation rate there).

[Kittygalore]

~

I agree with you, savings accounts at a bank are not very attractive  at the moment. For the last 5 years at least was the interest rate on the savings account below the inflation rate. On top of that are the bank fees rising. In my opinion going for banks is not a very attractive investment at the moment. The only real alternative are TIPS but these are treasury bonds and not really from the banks itself. So going for Gold and Crypto Currencies is the best way to protect ourself from inflation in my opinion.

Savings account isn't how it used to be, back then the returns are around the 2 digit percentage but right now, you are probably lucky to find a savings account that has 1%. We also have to consider that we shouldn't put everything that we own in our investments, remember that things could go wrong when you are investing and it sure as hell, you don't want all your money lost in one shot.

[Ucy]

Depends on how well the printed money would be used.

I'd probably buy up very useful things(like crypto) that have shared value, I have full control of,  that are limited (or scarce) in supply, have high demand, are easily divisible, benefits "stakeholders" when price goes up and benefits productions of essential/basic goods and services.
I don't think it's a good idea to buy up and hold essential goods/services that keep going up in price and become expensive for others to have

[Gozie51]

The difference when talking about inflation and relating to bitcoin is that , bitcoin is an asset that it's increase or decrease is not having any relationship to inflation. That is whether there is inflation in the society or a particular society is not going to affect the price of bitcoin because it is decentralised and a global asset. But on the other side, inflation can affect the value placed on the purchasing power or strength of it.

[uneng]

From that list I'm not familiar with most investments, so I can't say how good each of them is. But from my experience I think bitcoin is the best way to protect your money against inflation nowadays and one reason for that it's because it is easily reachable for anyone and you can invest small amounts of money and still have decent chances to turn it into profit on long run, while protecting your money against inflation.
Another investments demand a lot more money if you want to turn it into a considerable profit or passive income, furthermore there is also much more bureaucracy to be fullfiled. Such inconveniences only worth if the person is going to invest a lot of money. Without any doubts for the average joe bitcoin is the best option.

[teosanru]

Don't you think the question itself is quite wrong? Do we only need protection against inflation? I mean if the intent of investment is to merely get protected against inflation then even a Bank term deposit could help you with it. The question is to maximize your returns and we have the best data charts and historical analysis to tell that Bitcoin has proven to be the best asset with the highest returns ever. Not just bitcoins but many other cryptos have given even higher returns than bitcoin has given. So if our intent is merely to get a higher return then just throw your money in any undervalued crypto and let the magic happen. The best thing you can do is HODL or otherwise some positional trading by averaging yourself on every major dip. What is the need to read any such lengthy paper I don't get it?

[DigitalFox]

From that list I'm not familiar with most investments, so I can't say how good each of them is. But from my experience I think bitcoin is the best way to protect your money against inflation nowadays and one reason for that it's because it is easily reachable for anyone and you can invest small amounts of money and still have decent chances to turn it into profit on long run, while protecting your money against inflation.
Another investments demand a lot more money if you want to turn it into a considerable profit or passive income, furthermore there is also much more bureaucracy to be fullfiled. Such inconveniences only worth if the person is going to invest a lot of money. Without any doubts for the average joe bitcoin is the best option.

If you have just a little you wouldn't care about inflation. If you have more, then gold is still considered as the best investment by majority of people, especially in Asia, where it's common to buy it when you have extra cash and sell it whenever you need. Absolutely no paperwork is required. Unfortunately crypto can't take that place due to its volatility, you can only consider it as a long term investment.

[uneng]

From that list I'm not familiar with most investments, so I can't say how good each of them is. But from my experience I think bitcoin is the best way to protect your money against inflation nowadays and one reason for that it's because it is easily reachable for anyone and you can invest small amounts of money and still have decent chances to turn it into profit on long run, while protecting your money against inflation.
Another investments demand a lot more money if you want to turn it into a considerable profit or passive income, furthermore there is also much more bureaucracy to be fullfiled. Such inconveniences only worth if the person is going to invest a lot of money. Without any doubts for the average joe bitcoin is the best option.

If you have just a little you wouldn't care about inflation.

I think everyone should worry about inflation, even those who save little, because futurely their savings will be wasted if they don't do it in the correct way, that is avoiding fiat at all costs.

If you have more, then gold is still considered as the best investment by majority of people, especially in Asia, where it's common to buy it when you have extra cash and sell it whenever you need. Absolutely no paperwork is required. Unfortunately crypto can't take that place due to its volatility, you can only consider it as a long term investment.

Yes, if the goal is to keep the money's value on short run, gold is a good idea, because it's a pretty stable investment, so you can avoid fiat's depreciation and crypto's high volatility at same time. On the other hand, it's not possible to make much profit from this investment. On this aspect crypto is superior.

And nice to see people in Asia are educated to invest their money this way. Where I live the common sense is to just spend money until the last penny is over.

[Twentyonepaylots]

I believe that in this world, there are only two things that will continue on, it's change and inflation. Even the universe is expanding, which is a bit of a stretch but you could still consider that inflation. But I digress, store of value has definitely helped preserve the treasures and riches of the most influential people in the planet as of late, which by the way run amidst multiple crashes and economic downfalls. So it's no surprise but if one should happen within our lifetime, we could expect gold and bitcoin to save our asses.

[DigitalFox]

From that list I'm not familiar with most investments, so I can't say how good each of them is. But from my experience I think bitcoin is the best way to protect your money against inflation nowadays and one reason for that it's because it is easily reachable for anyone and you can invest small amounts of money and still have decent chances to turn it into profit on long run, while protecting your money against inflation.
Another investments demand a lot more money if you want to turn it into a considerable profit or passive income, furthermore there is also much more bureaucracy to be fullfiled. Such inconveniences only worth if the person is going to invest a lot of money. Without any doubts for the average joe bitcoin is the best option.

If you have just a little you wouldn't care about inflation.

I think everyone should worry about inflation, even those who save little, because futurely their savings will be wasted if they don't do it in the correct way, that is avoiding fiat at all costs.

What we think is irrelevant, people still do weird things

If you have more, then gold is still considered as the best investment by majority of people, especially in Asia, where it's common to buy it when you have extra cash and sell it whenever you need. Absolutely no paperwork is required. Unfortunately crypto can't take that place due to its volatility, you can only consider it as a long term investment.

Yes, if the goal is to keep the money's value on short run, gold is a good idea, because it's a pretty stable investment, so you can avoid fiat's depreciation and crypto's high volatility at same time. On the other hand, it's not possible to make much profit from this investment. On this aspect crypto is superior.

And nice to see people in Asia are educated to invest their money this way. Where I live the common sense is to just spend money until the last penny is over.

I'd take that with a grain of salt. Asians love to show off, so when someone buys gold here first they usually make sure everyone sees them wearing it but next day things change and they sell it back to use the cash. Strategic planning isn't a strong thing here either.