Inflation is a major concern for many. Professional investor Alexander Dillon from GPL Ventures LLC offers suggestions for protecting your wealth.
Inflation has surged over the past year. Aggressive monetary policies and disruptions caused by the COVID-19 pandemic, among other factors, are causing prices to jump. Fortunately, there are some strategies you can take to reduce the risks associated with inflation. Professional investor Alexander Dillon shares insights for protecting your wealth.
“Inflation is always a concern,” Alexander Dillon of GPL Ventures LLC notes, “but it’s an especially pressing concern right now. With inflation, money losses value, but that doesn’t mean you have to lose wealth.”
Some investment assets are seen as inflation-resistant. Property values have climbed substantially in many locales over the last year. If you had invested in property a year ago, you may have enjoyed substantial gains.
How about today? Property is certainly worth considering as an investment. Gold is another go-to inflation-resistant investment. Back in 2019, an ounce of gold was selling for less than $1,400. In recent weeks, gold has sold for more than $1,800. As with many things economic, limited quantities and high demand lead to rising prices.
“We’ve seen monetary supplies increase dramatically the last few years as governments have worked to support their economies amid the pandemic,” Alexander Dillon from GPL Ventures LLC says. “For better or worse, this may lead to inflation. Meanwhile, property, gold, and other assets are limited in supply, so prices often track up.”
Stocks too can enjoy strong gains and indeed, stock markets have reached record highs in recent months. Finding the right shares can be tricky and if you pick the wrong assets, you could lose money. One effective strategy for using stocks to protect wealth is to invest in stock market index funds, which are pegged to the rise and fall of all the stocks listed in an index, such as the S&P 500, rather than one company.
Some folks are also turning to cryptocurrencies to hedge against inflation. With fiat currencies, many governments can expand the money supply on a whim. Along with other factors, this may spur rising prices. With cryptocurrencies, like bitcoin, the supply of coins entering the market is typically limited. That said, cryptocurrencies are high risk, especially for folks not familiar with them. It may be wise to limit investments to risk capital that you can afford to lose.
Alexander Dillon of GPL Ventures LLC Suggests Portfolio Diversification No Matter Your Choices
It’s typically not a good idea to park all of your wealth in one basket. Spreading your investments across assets, says Alexander Dillon, can diffuse risks. If a few assets underperform, it will affect only part of your wealth.
When investing to protect against inflation, you need not choose gold or property, notes Alexander Dillon from GPL Ventures LLC. Instead, you can invest in property, gold, stocks, stock indices, and other assets at the same time.
If one asset suddenly gains a lot of value, you may feel you missed out. However, by reducing risks, you can enjoy peace of mind day in and day out while watching your wealth potentially grow, even amid periods of high inflation.