What is the simplest way to protect oneself against inflation?

The main reason for investing rather than simply saving is to keep up with or to outpace inflation.

Among themselves, economists are welcome to discuss what type of inflation we have. Is it cost-push, demand-pull, or built-in? In what percentage is each present?

Without an even elementary understanding of economics, John and Jane Doe see inflation in the grocery store, at the gas pump, in the lumberyard and anytime they want to buy anything. The Consumer Price Index shows a 6.2% rate of inflation from October 2020 to October 2021.

At that rate, money sitting in a savings account will lose half of its value in less than 15 years. Like savings accounts, bonds and treasury bills are called low-risk, safe investments. How safe are they at the present rate of inflation? Guaranteed Instruments of Confiscation, GICs, that’s what they are.

Stock market investing, done correctly, provides great protection against inflation.

Done correctly? Put your money into an exchange-traded fund (ETF) which tracks the entire US market; leave stock picking to others. ETFs tracking the S&P 500 an excellent example. Of the thousands of ETFs, only about six qualify.

Over the last hundred years or so, the average rate of inflation was about 3% per year. During that time, the stock market rose 9.8% annually. Like we stated, – great protection against inflation.

Some might ask what about Treasury Inflation Protected Securities (TIPS)? With these, their current yields have expected inflation already built in them.

Invest using the Monday Morning method and you will be able to buy more rather than less, during an inflationary period such as we now have.

Where is the Monday morning, hardly matters.

Good luck!

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Dr. Milan Somborac

The Monday Morning Millionaire Program supports do-it-yourself (DIY) investors which I have been for over 50 years. About my team and me