Inflation has become a big concern for many Americans. On Wednesday, the Federal Reserve ad that would raise interest rates for the first time since 2018, at a time when the pandemic and supply chain crisis have raised the cost of just about everything.
Food and cars are more expensive, as are transportation costs and labor of any kind. Things that could reduce inflation, such as stabilizing supplies and increasing labor participation, have not happened, Fed Chairman Pro Tempore Jerome Powell said.
From the central bank of the world’s largest economy they also corrected the rise in their inflation forecasts to a median of 4.3% for the end of the year, compared to the 2.6% projected in December.
How billionaires think
When it comes to inflation, some of the world’s richest men, like Elon Musk and Warren Buffett, have recommended very similar strategies.
On Sunday, Tesla’s chief executive tweeted that in times of high inflation, “it’s generally better to own physical things like a house or shares in companies you think are good products,” rather than keep cash stashed away.
There is nothing new. Buffett has been saying for years that one of the best ways to hedge against inflation is to own a piece of “a wonderful business.”
At the end of the Great Recession, the CEO of Berkshire Hathaway made it clear that no matter what happens to the value of the dollar, a company’s product will continue to be in demand.
“If you own Coca-Cola, you’re going to get a certain share of people’s labor 20 years from now and 50 years from now for your product and it doesn’t make any difference what’s happened to the price level,” he said in 2009 during the Berkshire Hathaway Annual Shareholders Meeting.
Investing in “physical things”, what does it mean?
But unlike the Oracle of Omaha, who is a bit more skeptical of cryptocurrencies (non-physical things), Musk remains confident in digital assets, clarifying: “I still have and will not sell my Bitcoin, Ethereum or Doge.”
Dogecoin jumped 7%, immediately after the CEO of Tesla issued that opinion, according to the magazine Fortune.
An article by Kevin Vandenboss for Benzinga points out that “the most important point of Musk’s message is that physical assets are generally the safest investment”.
“This message from ‘Father Doge’ himself should say a lot,” he said.
The real estate analyst believes that, although it is not a very feasible option for many investors at the moment, having the category of owner in this sector is a good strategy when there is high inflation.
“Specifically, single-family homes, multi-family homes, storage units and farmland,” Vandenboss mentioned as some of the options available to buy fractional shares or even invest in a fund with a property portfolio.
Four Ways to Invest in “Inflation Resistant” Property
In the single family homesFor example, retail investors can buy shares of individual rental properties with as little as $100. Vandenboss advises the real estate crowdfunding platform Arrived Homes, which allows users to search for properties, and simply choose which homes to invest in.
For the multifamily properties There are multiple options to receive passive income through crowdfunding. “Accredited investors can search for offers on sites like CrowdStreet or RealCrowd and invest in a project with minimum investments starting at $25,000,” the expert recommended.
Options are perhaps a bit more limited for non-accredited investors, but other platforms like CalTier Realty have a multi-family fund with a minimum investment of just $500.
storage unitsself-storage or “storage rooms”: Vandenboss highlights the real estate crowdfunding platform RealCrowd, which currently has an offer with a minimum investment of $50,000.
Lastly, the land with agricultural potential. They are also a good alternative and may be “one of the best long-term real estate moves available right now”.
Vandenboss explains that farmland is shrinking across the country at a rate of more than 1 million acres per year, while global demand for food is steadily increasing.
For example, farmland investment platform FarmTogether has already launched an offer for an organic vineyard in California, with a minimum investment of $15,000.
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