Property is best hedge against inflation
Inflation
Inflation can be termed as the increase in price. Inflation is caused by the money printing. Inflation increases the money supply but value of currency decreases. Inflation is also known as indirect tax by the central banks or government and an easy way to confiscate the wealth.
Best assets for protection against inflation
To hedge money against inflation, people invest in different assets. Best hedges against inflation are commodities, gold, currencies, stocks and property. Let’s discuss these assets / hedges in some detail:
Commodities like food items are good hedge against inflation and therefore traditionally used for investment. But we must know that food items like grains have certain expiry date.
Gold is the oldest hedge against inflation and also the oldest currency. During inflation gold price increases as gold keeps its true value. But recently gold price was reported to be manipulated and is now not the best hedge against inflation.
Currencies are also used for investment purposes and are considered as one of the best hedge against inflation. But problem with currency is that central bank can easily devalue currency by money printing.
Stocks and bonds are also used for investment purpose. In modern times stocks are also considered as inflation hedge. But stocks can be easily crashed by the brokers to confiscate the money. The collapse of stocks and bonds is every day story and are considered as very risky.
Property is best hedge against inflation
Property is the best hedge against inflation whatever the period we compare. For example gold price in 2011 was same as is now. But property price has increased by many folds since 2011. This is due to the limited land and high demand for properties. Scarcity of land makes property best hedge against inflation worldwide.