Things you need to do today before inflation takes off

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So what should investors be doing today? While inflation may take another year or more to get going, it’s not too early to start implementing long-term inflation hedges. These can include: natural resource and energy companies, accessible through the iShares S&P Global Energy Sector Fund (IXC); international equity markets with large commodity exposure such as Australia or Brazil, accessible through the iShares MSCI Australia Index Fund (EWA) and the iShares MSCI Brazil Index Fund (EWZ); physical real estate; and of course, gold.

Market Realist – The graph above compares the price performances of the iShares MSCI Australia Index Fund (EWA) and the iShares MSCI Brazil Index (EWZ) over the last 12 months. The former has lost 8.1%, whereas the latter has lost a whopping 22.8% in the last 12 months.

But, as inflation picks up, “commodity” economies like Russia (RSX), Brazil, and Australia should be good bets. Commodities (DBC) like oil (USO) and gold (GLD) are a good hedge against inflation.

Please read the next and final part of this series to see whether you should invest in TIPS to hedge against inflation.

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