Business News/ Markets / Five assets that could beat inflation in 2024
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Inflation has emerged as a primary concern for many since the world emerged from pandemic-induced lockdowns. People are realizing their incomes aren't keeping up with the escalating prices, and this is true even for those in tech sectors who received substantial salary increases.
Inflation has emerged as a primary concern for many since the world emerged from pandemic-induced lockdowns. People are realizing their incomes aren't keeping up with the escalating prices, and this is true even for those in tech sectors who received substantial salary increases.
Numerous businesses have faced challenges in sustaining profits due to the rising costs of raw materials. Commodity prices soared in the post-COVID phase and only began to decline in 2023, resulting in three years of intense margin pressure.
Numerous businesses have faced challenges in sustaining profits due to the rising costs of raw materials. Commodity prices soared in the post-COVID phase and only began to decline in 2023, resulting in three years of intense margin pressure.
This has had an impact on the world of investing, too. The unprecedented rise of retail investor participation in the stock market was at least partially due to the economic stress we all felt in 2020.
Ordinary people tried their luck in the Indian stock market, many for the first time, hoping to earn some extra money. And sure enough, they did, at least till the end of 2021. Of course, a lot of water has passed under the bridge since then.
Now, as 2024 arrives, the imperative to outpace inflation persists. Even though inflation rates have dropped compared to the past two years, prices continue to rise, a crucial factor for investors to consider in their 2024 investment strategies.
Let's explore five assets that could potentially counteract inflation in 2024:
#1 & #2 Gold and Silver
Gold and silver are classic inflation hedges. Their prices have risen recently, and many market experts hold a bullish outlook for these metals in 2024. As international and monetary assets, their values are closely tied to the US dollar's strength. The direction of the US dollar largely depends on international fund flows, which are influenced by interest rates.
With the US Federal Reserve signalling potential rate cuts in 2024, investors might shift their funds from safe US government bonds to riskier assets. Some of these funds are expected to flow into gold and silver, as falling interest rates are likely to weaken the US dollar, which bodes well for these metals.
For guidance on investing in gold and silver, check out Equitymaster's resources.
#3 High Dividend Paying Stocks
In periods of high inflation, investors often turn to stocks of large, well-established companies known for their substantial cash flows and generous dividend payouts. These companies can typically pass on increased raw material costs to consumers without losing market share. Their stability makes them attractive during inflationary times. Equitymaster offers a screener for identifying high dividend payout stocks and high dividend yield stocks in India.
#4 Real Estate
Real estate is a long-term asset, but it's expected to maintain its value in 2024. With interest rate hikes ceasing and a potential rate reduction cycle on the horizon, EMIs are likely to stabilize or decrease. Combined with gradually increasing incomes, real estate could become more affordable, potentially leading to a rise in both property values and rents. However, real estate should always be considered a long-term investment and requires thorough due diligence.
#5 Cryptocurrencies
While not a recommendation, it's worth noting that cryptocurrencies might continue their recovery, which began last year. Despite a challenging 2022, major cryptocurrencies like Bitcoin, Ethereum, and even Dogecoin have endured. Cryptocurrencies face numerous issues and regulatory hurdles, and we at Equitymaster refrain from endorsing any. However, if the current crypto bull market persists, they could potentially outperform inflation in 2024. But, as always with cryptos, caution and skepticism are advised.
Happy investing!
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com
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