I think its a hard call.

Real estate is inflated. Stocks are too, but seems less so than property, at least in Australia.

Traditional flight to safety like gold has significant gains last few years so are you buying another peak?

Meanwhile you know cash is devaluing 5-10% per year.

For my non-expert opinion I think Australia shares are fairly good relatively currently, but I say that as an Australian. Its reasonably valued compared to some of the markets, stable govt/economy with low govt debt as western nations go (consumer is high though). Shares will probably return dividends around 3-5% per year on a market tracking ETF, which should offset some drops while the market and inflation, and then you are in market for the turn as as the cycle flips and inflation has run I could see some sharp gains as companies revalue to the new cost bases.

Also I think a FSTE tracker wouldn't be so bad. Since Ukraine and general market drops these are off their peak pricing. US Id avoid as I think there's a bunch more to unwind both in the market, politically, plus govt debt (heading for 140% of GDP and showing no signs of slowing) so I would be hesitant market tracking there until things stabilise. That said there will always be amazing companies ongoing in the US if stock picking.

Im so far from an expert, so take all this with a shovel of salt. Keep things diverse. But overall I think a Aus/Eur market type tracker is probably a reasonably safe bet at the moment for a uncertain and unprecedented enviroment, and take the odd punt on companies that you think are getting trashed and fear has over taken. Keep some level of cash as if the markets do tumble you want to be able to go in, or generally have options.

I know nothing. Good luck.

> Real estate is inflated. Stocks are too, but seems less so than property, at least in Australia.

But are they? To me many stocks look comparatively flat over 30 years given the fact that they should point upwards just to correct for inflation in the currency they are denominated in and even more upwards when taking into account productivity gains.

Thankfully you're no longer earning negative interest on your bank account.

It's funny how people freaked out over the -0.1% interest rate but don't care about having money in the bank when the inflation is at +10%.

Absolutely.

I don't live where negative interest is a thing, but it seems like that would encourage people to keep money outside of banks.

Thus many EU countries reduced the maximum note value, reduced allowable amount for buying things in cash, and .se has mostly eliminated cash with everyone using cards.

How does that stop the money from being less valuable?

I'm not discussing inflation here, just the concept of negative interest on bank accounts.

If you had a pile of cash, it would remain a pile of cash. If you had 100,000 euro in the bank that might be 99,000 euro after some time because the bank essentially charges you a storage fee as interest rates are negative. Conversely, the bank would essentially be paying you to take out a loan.

Maybe I'm misunderstanding how it works since it's never happened in the USA, but I think that I have it right. See https://www.investopedia.com/articles/investing/070915/how-n...

Got it. I was confused because the parent to your post suggested people are cool with storing money on the bank with 10% inflation. That makes no sense to me because when you convert it to cash, the inflation still applies.

As for negative interest rates, here in the Netherlands banks didn't dare to go negative, even if conditions would warrant it. Perhaps because it might trigger a bank run.

Depends on your time horizon.

In the very short term, inflation linked bonds as other comments mention.

In the 15+ year bracket, probably equities.

Perhaps real estate at a low mortgage rate but it's not very diversified.

Gold is commonly touted as an inflation hedge, but that's over a much longer time horizon, probably longer than most people are alive.

In the end it really depends on the cause of inflation - expected vs unexpected, supply vs demand side.

Is gold still the inflation hedge? One the one hand yes, but if i.e SpaceX starship is a total success, asteroid mining could be the black swan for that. Though I may be totally wrong (and off by orders of magnitude) about that.

Gold hedges government.

Inflation linked government bonds from developed countries and your local currency or USD/EUR denomination, depending on your country you may get some tax advantages if you buy local ones. But you should probably have done this long ago, now it may be a bit late.

While that is better than nothing, for example US citizens are limited to only $10K USD in I-bond purchases per year per Taxpayer ID Number (TIN). Some people run their I-bond purchases through LLC's they control as well, but I don't know how the IRS would treat a fleet of LLC's set up purely just to get a TIN to use for buying I-bonds.

Oil and copper tends to follow inflation, but they're highly volatile so you can't rotate into them expecting good liquidity. If you hold say $100K+ USD you want to rotate and re-deploy after the carnage with fairly liquid assets at relatively low risk, then I can't think of much beyond take the hit in a conservative cash and select bonds positioned in a capital preservation posture, or Benjamin Graham-style conservative value equities.

There's no need for byzantine approaches to buying Series I savings bonds when you can get 1.5% real yields on TIPS.

There's no need for byzantine approaches to buying Series I savings bonds when you can get 1.5% real yields on long-term TIPS.

High dividend stocks have been a good bet and hedge in previous downturns. Individual stocks will have high variance, but a basket of high dividend stocks would be worth looking into.

The usual stuff - gold, silver, real estate.

Yes property, shares, gold, here is a fantastic breakdown on inflation and the COVID stimulus: https://www.youtube.com/watch?v=Qlr5Vzrextk

Real estate probably for medium term, stocks for long term.

Do you have inflation protected bonds? In the USA you can buy I-Bonds (max $10k/year per person) that pay interest at the current inflation rate.

But what is considered “safe” really has a lot to do with your timeline. How soon do you want to access the money? If it’s in tears then index funds are likely a good buy today.

There are also TIPS which don’t pay as well but you get back 80-90% of inflation as a dividend

Poland offers something similar, but with a twist. On the plus side, the amount you can buy is unlimited. However, interest rate is fixed in the first year, at 7% (which is a far cry from 17.9% inflation). From the year two the interest rate is inflation rate + 1% premium. You can buy either 4 or 10 year bonds.

Inflation + 1% beat a lot of bonds the last decade to be sure.