Dividends are a way to compensate for inflation.
What can we learn from the past about avoiding the effect of inflation on your savings – making your savings worth less?
Many economists think equities/stocks are a better way to protect your portfolio over the long term, particularly against an unexpected flare-up of inflation, which is what we are experiencing now. Corporate earnings often grow faster when inflation is higher because prices of companies’ goods and services are higher.
Gold being a real, tangible asset tends to hold its value. However, other factors drive its prices, which can fluctuate wildly from year to year.
No one really knows how inflation will affect Bitcoin because Bitcoin was only created in 2009 and there hasn’t been much inflation since then. With regard to inflation, its performance has been rather unexplainable. Bitcoin doubled from mid-December 2020 to early January 2021, as inflation started to heat up. But then, quickly with no change in inflation, between Jan. 8 and Jan. 11, it lost 25% of its value.
Real estate is reliable protection against inflation. As a real, tangible asset, it tends to hold its value when inflation kicks in unlike cash. As prices increase, so do property values..