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By Michael Morris
Wealth of Geeks
Inflation finally dropped in March 2023 to 4.98%, the lowest since April 2021. However, while showing signs of continuing this downward trend, it is still higher than the long-term average, meaning most things are still more expensive than we'd like.
Inflation hits us all where it hurts most: our wallets.
But you can make the most of your money by putting it to work for you with investments. There is a myriad of options out there for making your dollars last, and while it can be difficult to figure out what investment options are right for you, there will always be a choice that works best.
By investing your hard-earned money in multiple places, you are securing a better chance at protecting your money's value and saving your future self from the strife of financial struggle.
High yield
savings account
High-yield savings accounts are one of the safest places to keep your earnings, and because of high-interest rates, they aid in protecting your money's value.
These savings accounts are also the lowest-risk option for investors; you always have access to your ever-growing funds.
It's best to open a high-yield savings account before a large blow to the market or an inflation spike. Since there's no way to predict that, it's good to know there is never a wrong time to open one. Just be sure you choose a bank that is FDIC insured to secure guaranteed protection for your funds up to 250,000 dollars.
Exchange-Traded Funds
In the same vein as mutual funds, you have exchange-traded funds (ETFs), which handle their holdings in a similar fashion. ETFs are managed professionally, have lower risks, and can access various asset classes.
High liquidity exchange-traded funds have the benefit of the stock market combined with the typically low expense ratio. This adds to the overall allure of investing in them, and if it all gets to be too much, you can always hire advisors to look after your exchange-traded funds for you.
Treasury
inflation-protected securities
Treasury Inflation-Protected Securities (TIPS) fall closely in line with your typical bond. TIPS are designed to mirror inflation and increase the interest rates for each bond when inflation goes on the rise.
These are some of the safest investments you can make because they are government-backed and one of the best types of securities to use to diversify.
Because they are specifically designed to protect you and your investments during times of unforeseen inflation, they are often viewed as one of the easiest investments to start with when considering long-term investments in an effort to combat current inflation.
Bonds
Bonds are a good way to protect your money in both the long and short term. Experts recommend having a variety of savings bonds, but you can also turn to other short and long-term bonds when attempting to combat inflation.
With short-term bonds, you can keep your money safe and on pace with inflation without withdrawing and holding it in cash. With long-term bonds, you give yourself a worthwhile long-term investment but don't necessarily have the same level of liquidity that you get with short-term bonds.
I-Bonds are another type of bond that is specifically designed to protect your investments during modern inflation spikes. These are typically the most popular choice in terms of bonds.