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5 Things You Can Do Now to Prepare for Rising Inflation
Gold: No matter what, it's worth something
By John Waggoner, USA TODAY
Real estate: Not so great now, but a good hedge
If you own a home, you probably have plenty of real estate. Despite the dismal state of the real estate market, however, your home can be a significant inflation hedge in the future.
Home prices — absent a bubble — mirror the consumer price index fairly faithfully. And if you have a low-rate, 30-year, fixed mortgage, your note will become a thing of beauty as prices rise. Your home value will rise, your salary will rise, but your mortgage payment won’t. In addition, you’ll repay the loan with cheaper dollars.
The catch: Interest rates tend to rise at the end of an inflationary period, squeezing new home buyers out of the market — and forcing prices down.
Real estate funds invest in real estate investment trusts, orREITs, which have had the paint peeled from them in the past few months. REITs invest in commercial real estate, and that market is starting to crumble.
Tips:
•Top real estate fund: CGM Realty fund (CGMRX), up 26% the past five years.
•Realty Income REIT (O) strives to pay regular dividends; current yield is 8%.
