How can we beat inflation?
Own assets.
What type of assets?
Assets that appreciate and/or produce income greater than inflation over time.
While history is not a perfect predictor of the future, it does tell us what has happened in the past, and it can be a helpful guide.
Over the past 10 years, the consumer price index has increased by just over 30%, meaning prices on a general basket of goods are 30% more expensive than they were 10 years ago.
Knowing this, it’s important to own assets that have grown, and will continue to grow, faster than inflation.
How do we overcome this general level of price increases?
- Gold prices have increased almost 62% over the last decade.
- The Case-Shiller Home Price Index (a proxy for residential real estate) gained almost 95%.
- The stock market achieved a staggering 230% gain.
Investors in gold, real estate, and the stock market have done well over the last 10 years and have kept investors significantly ahead of inflation.
Will the future look exactly like the past? The short answer is no, but it won’t surprise me if it looks somewhat similar.
-Paul R. Rossi, CFA