The price of gas has really caught your attention, but that’s not the only thing that’s gone up. According to recent data, the cost of groceries has risen nearly 8% over the last 12 months.
Now is a good time to ask yourself if your market investments are safe.
To your benefit, there are specific types of stocks to invest in during inflationary economic periods. These stocks are intrinsically tied to our society and hedge against the rise in prices.
Continue reading for the five best types of inflation stocks you should consider adding to your portfolio.
When looking for types of stocks to invest in during inflation, there is no better category than oil stocks.
Due to its major economic influence, we often see the price of gas directly related to inflation levels. And because people continually rely on it in their everyday lives, the price of its stock will almost always go up.
We’ve already seen the trend in motion this year. Research shows the price of gas has gone up 84% in the past 12 months. For those interested in investing in oil, consider looking into the United States Oil Fund ETF.
2. Emerging Markets
When domestic prices are going up, you’re likely to find good investments in emerging markets. Countries such as China, Brazil, and India are worth looking into for stocks that do well in inflation. Take a close look at any new or updated monetary policies emerging countries are using to improve their market competitiveness.
In the past, we’ve seen emerging markets do particularly well. While the current world climate has many markets struggling, upcoming countries tend to have an average growth of 18%. When considering inflation stocks, take a look at Vanguard FTSE Emerging Markets ETF.
With an average 16% gain, gold is one of the best stocks for inflation.
Because of its physical nature, gold protects purchasing power in the long run. for those considering indexed universal life insurance, you can expect gold to serve you well for many years.
4. Cyclical Stocks
Due to their natural volatility, cyclical stocks tend to do very well during inflationary periods. Businesses such as restaurants, airlines, and automobile manufacturers charge more for their products and services, boosting their value. Keep an eye out for these investments because they can drop during recessive economic periods.
While they have a tendency of doing well, the current state of the world shows cyclical stocks down on average 18%. For a reliable trade fund, take a look at Invesco DWA Consumer Cyclicals Momentum.
5. Defensive Stocks
In times of inflation related to domestic or international conflict, defensive stocks do particularly well.
While they hold a 10% gain on average, well below other stock options, defensive stocks are soaring in the current market. In accordance with the state of the world, defensive stocks are up over 14%.
When looking for types of stocks to invest in, defensive stocks bundle well. Consider investing in Invesco Defensive Equity for reliable gains.
Our Favorite Types of Stocks to Invest In
Hedging against inflation is a big decision, especially since the wrong investment can result in major losses. We hope you appreciate this list of the best types of stock to invest in during inflationary periods.
For more investment recommendations, as well as information on building passive income or help with taxes, check out our Managing Finances section.