You won’t want to hear this, but… Your portfolio could be a ticking time bomb.
And it’s all thanks to inflation.
As it eats away at the value of your money, you could be in for a rude awakening when it’s time to retire… and you find yourself coming up short, unable to live the life you want.
Here at Intelligent Income Daily, our goal is to make sure that doesn’t happen. We want to see you enjoying your golden years, not stressed out by them.
To accomplish that, we look for the safest income-producing investments: dividend-paying stocks and strategies that keep paying you money year after year…
Beating inflation and then some.
Today, I’ll share how one country’s approach is protecting it from that hard-hitting force – and how we can make our portfolios inflation-proof too.
It’s something you can use to help preserve your wealth for years to come.
How Bad Has Inflation Gotten?
Most governments spend and borrow money like teenagers with no-limit credit cards. And that bad habit kicked into overdrive in the last two years.
It’s led to over 8% inflation in the U.S. and most of Europe right now – the highest in decades.
Here’s how we got here…
The U.S., Asia, and Europe all borrowed and spent huge sums of money due to COVID-19. Three times as much as the bailouts of the Great Recession of 2008-2009, in fact.
But you can’t just pump massive amounts of money into the economy and walk away… Someone has to pay the tab.
That “someone” is everyday folks like you and me, through rising prices everywhere.
Electricity prices in Europe were soaring by mid-2021. (Think a 4x increase in less than a year.) Gasoline prices hit all-time highs in the U.S this summer. And the Consumer Price Index’s (CPI) food category was up more than 10% year-over-year in June.
Overall, inflation in the U.S. is at 25-year highs.
Yet we don’t need to predict what happens from here. I agree with the experts that we’ve probably hit peak inflation, but that doesn’t mean the climb down will be painless.
So we want to still prep our portfolios to withstand whatever’s to come.
And one tiny country in Europe has a proven strategy to do just that.
What You Need to Save Your Portfolio
Switzerland’s inflation rate sits at 3.4% today. Compare that to its neighboring countries, which sit around 9%.
In fact, on a long list of countries, only Japan has lower inflation. So obviously, we want to know how it’s been able to achieve this feat…
For one thing, Switzerland’s electricity is primarily hydro- and nuclear-powered. Less than 1% comes from imported oil and gas.
Plus – and here’s the part we can use – the Swiss Franc must be backed by at least 40% gold.
That’s right, Switzerland never left the gold standard.
Gold is a hard asset with limited supply. And hard assets are excellent to own during inflationary times. They’re tangible, finite, and can preserve their value over time.
That’s why we need to own some, taking a page from Switzerland’s book to fight inflation in our own portfolios.
While gold is great, it’s not practical to use in day-to-day life. Not when we have bills to pay. That’s why income-generating real estate is my go-to inflation hedge instead.
Inflation causes the value of land and buildings to rise. So, as a hard asset, real estate can protect my portfolio from inflation – and deliver big income in the process.
The best part is you don’t need to buy a whole property to get real estate exposure. You can do it by buying shares of real estate investment trusts… right through your brokerage account.
REITs provide attractive and durable dividends through smart and profitable real estate investments. You can think of them as corporate-sized landlords that get big government incentives to give you large pieces of their income pie every year.
As a sector, they’re very diversified – renting out everything from apartment buildings to office space, warehouses, medical facilities, and more – and mostly run by management teams that know how to grow both their stock prices and their dividends for your benefit.
As such, I believe REITs belong in just about every investor’s portfolio. The kind I usually recommend own 100% hard assets. So, they’re a proven way to fight inflation.
One of my favorite REITs today is Realty Income (O). It has a 53-year track record of increasing dividends – and it’s never missed a payment. Moreover, it’s still trading below pre-pandemic highs, despite beating estimates three quarters in a row.
This makes it a great way to take advantage of real estate in today’s environment.
We can’t switch our government with Switzerland’s. But we can protect our portfolios from inflation by focusing on the assets that have lasted the test of time.
Happy SWAN (sleep well at night) investing,
Brad Thomas
Editor, Intelligent Income Daily