Where to hide cash from the inflation?

[DjBrown]

Any idea where to park cash for the next 1-2 years?

I just bought PM. They have lot of pricing power (very wide moat) and hopefully will be able to deal with inflation better than cash.

 

[Sunset]

I-bonds will keep up with inflation.
limited to 10K pp per year, unless do special things, so that is annoying.
Cannot cash them the first year.

 

[DjBrown]

I-bonds will keep up with inflation.
limited to 10K pp per year, unless do special things, so that is annoying.
Cannot cash them the first year.

But they have negative yields. So they "guarantee" loss of money. Not a big loss but nonetheless loss.

I am really looking for companies that keep up with inflation in current environment. (Better say good bet in that direction with minimal volatility). KO is another company that looks promising in that area.

PM and KO both reported today and indeed they are doing just fine with positive outlook in a current environment.

 

[Montecfo]

But they have negative yields. So they "guarantee" loss of money. Not a big loss but nonetheless loss.

I am really looking for companies that keep up with inflation in current environment. (Better say good bet in that direction with minimal volatility). KO is another company that looks promising in that area.

PM and KO both reported today and indeed they are doing just fine with positive outlook in a current environment.

I think you are confusing I-bonds with TIPS. I-bonds are currently yielding north of 7 pct.

As far as what to buy:stocks with pricing power, banks, industrials and avoid bond duration.

Covid gave birth to inflation. As it becomes more normalized, a number of positive effects favorable to inflation can take hold.

 

[OldShooter]

But they have negative yields. So they "guarantee" loss of money. Not a big loss but nonetheless loss. ...

Of course. That is the price of government-backed inflation protection. Conventional bonds guarantee the loss of money vs inflation, too, but the loss to inflation is theoretically unlimited. So the nominal loss is less and the risk is higher.

If serious inflation persists, equities will lose too. Hardly anyone except maybe illegal drug dealers has unlimited pricing power and the ability to make instantaneous price changes.

It's kind of like life insurance. The more protection you want the higher the premium is going to be.

 

[gt5059b]

But they have negative yields. So they "guarantee" loss of money. Not a big loss but nonetheless loss.

I-bonds are currently earning 7.12% annualized that give you a 0% real return which is the definition of keeping up with inflation.

 

[pb4uski]

I think you are confusing I-bonds with TIPS. I-bonds are currently yielding north of 7 pct. ...

+1 he is confusing i-bonds with TIPS, but he is very sure about it.

 

[jebmke]

Stocks would not be my choice for a 1-2 year horizon.

 

[jebmke]

I-bonds are currently earning 7.12% annualized that give you a 0% real return which is the definition of keeping up with inflation.

What is the future inflation rate? We know what the historical one was, but what is the future rate?

 

[disneysteve]

Any idea where to park cash for the next 1-2 years?

Money you’re going to need in 1-2 years should be in a money market account or CD, not stocks.

 

[pb4uski]

What is the future inflation rate? We know what the historical one was, but what is the future rate?

Hold on. I gotta find that bloody crystal ball. I know it's around here somewhere!

 

[OldShooter]

Hold on. I gotta find that bloody crystal ball. I know it's around here somewhere!

From memory, the long term US inflation average as of a few years ago was 4.11%, well under the past 30 years rate. Here's a slightly outdated chart.

 

[teetee]

If it were a year ago I would say put money into your very own car dealership.

A chip fab plant or supply chain company will probably have a couple more of years of high demand.

 

[DjBrown]

Hold on. I gotta find that bloody crystal ball. I know it's around here somewhere!

Wow like go all cash in 2020 .

 

[pb4uski]

^^^ except I didn't

 

[USGrant1962]

From memory, the long term US inflation average as of a few years ago was 4.11%, well under the past 30 years rate. Here's a slightly outdated chart.

It is more like 3%, unless you start with the biggest, longest inflationary period outside of World Wars. The Federal Reserve and CPI-U were created in 1913, so that is "long-term" inflation where we have reasonable numbers and reasonably similar financial structure (setting aside the gold standard business, which actually didn't help with inflation if you look back further).

This site calculates 3.1% since 1913.
https://inflationdata.com/Inflation/Inflation_Rate/Long_Term_Inflation.asp

And multpl.com shows ~2.25%, but goes back to the 1870s with pre-Fed and pre-CPI wonky, wild data.
https://www.multpl.com/inflation

 

[Chuckanut]

What is the future inflation rate? We know what the historical one was, but what is the future rate?

Jeb, if you can find me a Quad Matrix Tachyon Asymmetric Filter I may be able to get my time machine working. Then I can answer your question.

I would look at interest rate history from the mid 70's to the early 80's to get a feel for what may happen to interest rates today. No guarantees, of course.

 

[Bamaman]

If it were a year ago I would say put money into your very own car dealership.

A chip fab plant or supply chain company will probably have a couple more of years of high demand.

Sent from my Moto G (5) Plus using Early Retirement Forum mobile app

I put my spare cash into a new car, a new boat and a new RV 6 years ago. I was just replacing aging assets.

 

[mrfeh]

But they have negative yields. So they "guarantee" loss of money. Not a big loss but nonetheless loss.

I am really looking for companies that keep up with inflation in current environment. (Better say good bet in that direction with minimal volatility). KO is another company that looks promising in that area.

PM and KO both reported today and indeed they are doing just fine with positive outlook in a current environment.

If you are looking for an investment that will never have a negative return in real dollars, you'll be looking for a very long time.

 

[pb4uski]

^^^ But if you do find an investment that is guaranteed to outpace inflation, then please either let us know or send me a PM on what it is.

 

[Chuckanut]

^^^ But if you do find an investment that is guaranteed to outpace inflation, then please either let us know or send me a PM on what it is.

I'll settle for an investment that simply keeps me even with inflation on real terms. I guess I am easy to please

 

[Fermion]

I'll settle for an investment that simply keeps me even with inflation on real terms. I guess I am easy to please

pinball machines

 

[OldShooter]

Actually, as I think about it, we have been doing quite a bit to deal with inflation. We are building a house this year, digging planned to start March 1. Our contractor and his lumber yard are both savvy and aggressive; we have well over $100K in materials ordered with some received.

When the tornadoes hit in the SE, the contractor immediately ordered all of the OSB and plywood we'll need. He says the current price has doubled from when he ordered.

Very expensive window package ordered after negotiating down part of the vendor's 2021 30% increase and before his 5% increase in January.

Shingles ordered at a small "spring sale" discount and the day before a January price increase.

All of the trusses ordered in January and the price locked.

All of the nails and screws ordered, contractor says prices on these have doubled since his order.

So that's one way to inflation proof some dollars, I guess.

 

[mrfeh]

I'll settle for an investment that simply keeps me even with inflation on real terms. I guess I am easy to please

Even then, your only option is individual TIPS.

 

[mystang52]

Full disclosure, I consider myself reasonably savvy about personal finance but freely admit I have no expertise in finer nuances of investing. That being said, for those of us who prefer lazy man investing, I think current financial events should usually be ignored to a large extent. Whether it's inflation, or a market downturn, isn't that the reason most of us have a balanced portfolio?
Precisely because I am no expert, my ratio of stock and bond mutual funds and cash give me a comfort level so I do not stress out over market blips. Am I missing something?