how to protect cash against inflation?

[espanish]

"this has nothing with this forum, why are you asking this here?"

this has everything to do with this forum. all the time we are discussing self-improvident, going to the gym, and getting your finances in order.

there is a belief out there that the US dollar is about to collapse. all my money is in the bank and I am nervous about this. I have considered buying real estate but prices are so damn high now. and I believe with companies closing left and right and people losing their jobs, people will be unable to pay for the homes they bought > foreclosure > another 2008 housing crash (maybe that's not in the plans at all and "they" want to keep housing unaffordable forever so that the common man can't afford housing and pays "them" rent, but I am going with the belief that real estate will crash)

the next option is gold. When people say they invest in gold, what does that mean? do they buy a stock that moves according to gold prices? or they literally go to the store and buy a gold bullion? but what good does that gold bullion do? you can't buy anything with it. you can't go to the grocery store and buy bread and give them gold.

how else can I protect my money? I am nervous about having all this cash in the bank. this is really messed up.

 

[threeforfree]

I invest. Depending on your timeline.

S&P 500. The gov will do ANYTHING in its power to avoid a collapse. If it completely collapses EVERYTHING is screwed.

Alternatively you if you want to simply minimize inflation, you can get over 4.5% in money market accounts now. You're still losing, but not as much.

 

[espanish]

I invest. Depending on your timeline.

S&P 500. The gov will do ANYTHING in its power to avoid a collapse. If it completely collapses EVERYTHING is screwed.

Alternatively you if you want to simply minimize inflation, you can get over 4.5% in money market accounts now. You're still losing, but not as much.

I don't like the spy right now, if the stock market crashes, so will spy.
with money market, my money would still be cash. I don't want cash since the dollar is about to collapse.

 

[threeforfree]

I don't like the spy right now, if the stock market crashes, so will spy.
with money market, my money would still be cash. I don't want cash since the dollar is about to collapse.

Which is why I said timeline is important.

If you're 65 years old, that's one thing. Where do you think the S&P will be 10, 15, 20 years from now? If it crashes, you can buy more at a deep discount and it will catapult your earnings when it recovers. If it crashes and never recovers, the money you have in the bank is the least of your worries, and will be worthless anyways. Think Venezuela, Zimbabwe.

Everyone is always doom and gloom, and we're honestly not in a great spot right now. But never underestimate the government's ability to do whatever it takes behind the scenes to bring things back for their next elections.

 

[Bible_Belt]

The price of food is continuing to rise, and the russia v ukraine war is shutting down much of the world's fertilizer production, which will make it worse. Farmland or some sort of investment in agriculture or food production is an inflation hedge.

 

[jaygreenb]

"this has nothing with this forum, why are you asking this here?"

this has everything to do with this forum. all the time we are discussing self-improvident, going to the gym, and getting your finances in order.

there is a belief out there that the US dollar is about to collapse. all my money is in the bank and I am nervous about this. I have considered buying real estate but prices are so damn high now. and I believe with companies closing left and right and people losing their jobs, people will be unable to pay for the homes they bought > foreclosure > another 2008 housing crash (maybe that's not in the plans at all and "they" want to keep housing unaffordable forever so that the common man can't afford housing and pays "them" rent, but I am going with the belief that real estate will crash)

the next option is gold. When people say they invest in gold, what does that mean? do they buy a stock that moves according to gold prices? or they literally go to the store and buy a gold bullion? but what good does that gold bullion do? you can't buy anything with it. you can't go to the grocery store and buy bread and give them gold.

how else can I protect my money? I am nervous about having all this cash in the bank. this is really messed up.

A combination of options is probably the safest way to do it. Bitcoin, Gold, commodities and TBills. They all have their pros and cons. Bitcoin is not good if you need to convert in less than a year. You need physical gold in hand to provide insurance against a collapse, paper could very well be worthless in that scenario. With physical you are instantly down due to dealer premiums. Commodites could get crushed in a demand destroying event that drops consumption. TBills and high yield savings accounts like Apple's, pay 4.15-5% but inflation is currently higher than that. That being said, I have a pretty large allocation to those I just listed

 

[jaygreenb]

Which is why I said timeline is important.

If you're 65 years old, that's one thing. Where do you think the S&P will be 10, 15, 20 years from now? If it crashes, you can buy more at a deep discount and it will catapult your earnings when it recovers. If it crashes and never recovers, the money you have in the bank is the least of your worries, and will be worthless anyways. Think Venezuela, Zimbabwe.

Everyone is always doom and gloom, and we're honestly not in a great spot right now. But never underestimate the government's ability to do whatever it takes behind the scenes to bring things back for their next elections.

Markets can stay irrational longer than you can remain solvent comes to mind. Also a very true statement. I have learned this the hard way several times. Best thing you can do is manage risk, be allocated so no one scenario can completely wipe you out and you have flexibility to weather a storm

 

[AureliusMaximus]

what does that mean? do they buy a stock that moves according to gold prices? or they literally go to the store and buy a gold bullion?

Both. Gold stocks are more complicated and you should really know what you are doing.

 

[taiyuu_otoko]

This is the million dollar question every single money manager and hedge fund manager and newsletter writer and online super star financial genius flexing fist fvker is trying to answer.

Nearly all will be wrong.

There's no such thing as magic box that you can put your money in where you'll be assured the returns will beat inflation.

So, why do you think a bunch of online rando's are going to have the answer?

Nobody knows.

 

[EyeBRollin]

Real estate.

 

[corsica]

Real estate.

It can lose value like it did in 2007. Zero-rate interest is over. Bubble is not going to inflate anymore.

Like mentioned by @taiyuu_otoko , there is no magic answer.



Now that rates are at a reasonable levels (5%), my recommendation is to leave it in a savings account. NewTek bank is paying 5% APY and it's FDIC insured, so your money is safe. And you have liquidity when something goes on sale. Be it real estate, gold, stocks or whatever you want to buy.

If you're not sure it's cheap, it's because it's not.
When you see a 5% discount in a home, it means crap. But if your neighbor is desperate to sell his house at a 30% discount to pay for a medical bill... You know you can buy it and sell it at a profit in the near future.

My brother bought a Rolex for $11k knowing it was a bargain. IIRC It took him 3-4 months to find a buyer but he sold it for $20k. He knew it was cheap.

 

[EyeBRollin]

It can lose value like it did in 2007. Zero-rate interest is over. Bubble is not going to inflate anymore.

Short term losses only. Long term, real estate is the safest vehicle there is. It always has been. Land has value and does not depreciate. Every wealthy person invests in real estate. Hell, even successful companies dabble in real estate. No one actually goes to McDonalds for their burgers; they go because there happens to be one located on every relevant corner all over the world.

 

[itouchyou]

My brother bought a Rolex for $11k knowing it was a bargain. IIRC It took him 3-4 months to find a buyer but he sold it for $20k. He knew it was cheap.

Curious, what model was this? Was it new?

I have a datejust fluted/jubilee two tone I bought for $14k, I'd be ecstatic if I could resell it for $20k.

 

[jaygreenb]

Real estate.

If we stay in an extended period of higher rates and trend that way for a longer cycle, anything tied to cheap debt could get smashed. Since early 80's we have been in a period of rate decreases. What worked past few decades may not for the next few. Of course Real Estate may be fine but personally would not count on it to be the case

 

[jaygreenb]

It can lose value like it did in 2007. Zero-rate interest is over. Bubble is not going to inflate anymore.

Like mentioned by @taiyuu_otoko , there is no magic answer.



Now that rates are at a reasonable levels (5%), my recommendation is to leave it in a savings account. NewTek bank is paying 5% APY and it's FDIC insured, so your money is safe. And you have liquidity when something goes on sale. Be it real estate, gold, stocks or whatever you want to buy.

If you're not sure it's cheap, it's because it's not.
When you see a 5% discount in a home, it means crap. But if your neighbor is desperate to sell his house at a 30% discount to pay for a medical bill... You know you can buy it and sell it at a profit in the near future.

My brother bought a Rolex for $11k knowing it was a bargain. IIRC It took him 3-4 months to find a buyer but he sold it for $20k. He knew it was cheap.

When you suddenly have a risk free return of 5% that is liquid, changes a lot of dynamics in investing. A lot of investments look a lot less attractive than when you received no yield from cash. Investment gets a lot more conservative. Going to be an interesting few years

 

[EyeBRollin]

What worked past few decades may not for the next few. Of course Real Estate may be fine but personally would not count on it to be the case

It doesn’t matter what economic cycle we are in. Real estate is tangible and will always have value.

 

[jaygreenb]

It doesn’t matter what economic cycle we are in. Real estate is tangible and will always have value.

It will always have value but its return is dependent on the price you purchased at, like all investments. If you bought at house at the peak it is a lot different story than buying at a low. Any industry that had major price moves due to low rates can potentially get smoked. Like all investments you make your return on when you buy. Most investments have "value" just what value will it be relative to your purchase price

 

[EyeBRollin]

It will always have value but its return is dependent on the price you purchased at, like all investments.

Not the same as other investments. Real estate investors leverage a financial institution’s money for reoccurring cash flow. Market appreciation is just the cherry on top.

 

[corsica]

Curious, what model was this? Was it new?

I have a datejust fluted/jubilee two tone I bought for $14k, I'd be ecstatic if I could resell it for $20k.

it was a Daytona. He bought it at an auction. There was 1-2 missing link making the watch less marketable (smaller wrist previous owner). He bought the part and dealt with a friend who owns a jewelry store.
My brother made similar bids in dozens of other Rolexes but the price always was close to “retail”.

It wasn’t in the US.

The point is that having liquidity is important. You never know when a good opportunity will appear.

 

[SargeMaximus]

Commodities