Elon Musk posted in a thread on Twitter last year, after inflation hit a 40-year high for the first time, advising followers to own “physical things” when inflation is high.
In the tweet, Musk said “As a general principle, for those looking for advice from this thread, it is generally better to own physical things like a home or stock in companies you think make good products, than dollars when inflation is high.
I still own & won’t sell my Bitcoin, Ethereum or Doge fwiw.”
The biggest takeaway for some followers seems to have been that Musk is still holding his Dogecoin because the cryptocurrency’s price saw a temporary spike shortly after the tweet.
However, the more important point to Musk’s message is that physical assets are generally the safest investment during times of high inflation. This message coming from the “Dogefather” himself should speak volumes.
While inflation is finally starting to cool off in the U.S., it still remains fairly high with the January Consumer Price Index (CPI) data coming in at 6.4% year-over-year. This means Musk’s advice to own physical things is still just as relevant today as it was a year ago.
Here are three that have historically performed well during periods of high inflation.
While Musk referenced owning a home, real estate, in general, performs well for investors during years of high inflation. Specifically, single-family homes and multifamily properties. Regardless of the fluctuation in values, these assets can provide consistent cash flow through all economic environments.
Running out to buy a property may not be the most feasible option for most investors right now, but luckily there are options available to buy shares of fractionalized real estate.
Art has been a popular method of storing wealth for generations, which is no surprise considering that it has outperformed the S&P 500 for the past 25 years and appreciates at an average rate of 23.2% in years where inflation is at least 3%.
This type of investment used to be available only to the ultra-wealthy. However, retail investors now have options to buy shares of valuable works or invest in art funds.
The Liv-ex Fine Wine 1000 index had one of its strongest years in 2022 as inflation soared. The index, which tracks 1,000 wines from across the world, is down 0.8% year-to-date but is up 8.4% over the past 12 months.
Retail investors have gained access to this market by purchasing securitized shares of wine collections and even buying and selling individual bottles through investment platforms.
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