The recent inflation data came as no surprise to most investors, although the 8.5% increase in the March CPI was higher than economists had expected.
The additional pressure added to the stock market from this new data makes some alternative investments more attractive. This is especially true with alternative investments linked to physical assets, which often increase in value with inflation and remain more stable during a market downturn.
Almost all types of real estate have performed well over time, but inflation concerns make certain sectors of this asset class more attractive than others.
Properties with short-term leases usually offer the largest hedge against inflation since rental rates can be adjusted quickly. While long-term leases often have built-in rent increases linked to inflation, they are usually limited to 3% per year.
One-year leases are common in multi-family and single-family rentals. This allows the property manager to adjust rents annually to keep pace with the market. Self-storage units have shorter leases, usually month to month, giving operators the ability to adjust rents each month if necessary to keep pace with rising costs.
Running out of real estate may not be the most viable option for most investors right now, but the availability of segmented real estate investments is increasing.
Investors can buy shares in rental properties for as little as $100, or invest in large-scale multi-family projects in some of the country’s fastest growing cities.
See also: Benzinga’s best real estate investment offers.
Art has been a popular way to store wealth for generations, which isn’t surprising given that it has outperformed the S&P 500 over the past 25 years and has risen 23.2% in years when inflation is at least 3%.
This type of investment was only available to the wealthy. However, retail investors now have options to buy shares of valuable artwork.
See also: Best Benzinga Art Shows.
The global art market has experienced amazing growth recently, with total auction sales reaching an all-time high in 2021. This is largely due to the increasing number of investors entering the market in search of reliable alternative investments.
The United States is losing farmland at a rate of more than 1 million acres annually, while global demand for food is steadily rising. Among the costs that are increasing the most is food, especially made from wheat and corn.
According to the laws of supply and demand, the likelihood of agricultural land seeing significant increases in value appears to be high.
Farmland has produced positive returns every year since 1991, with low volatility compared to other major asset classes and little correlation with the stock market.
See also: Farmland offers on Benzinga.
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