Timeline for Are there good ways to hedge against a combination of high inflation & rising rates?
Current License: CC BY-SA 4.0
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| May 3, 2021 at 19:40 | comment | added | Grade 'Eh' Bacon | Do you live in the US? Are your expenditures in USD? If so, the USD going up or down (short of hyperinflation) is of little importance to you. You are trying to hedge against your own personal living expenses - the success / failure of the EUR vs the USD has little bearing on your rent in Ohio, or wherever. | |
| May 3, 2021 at 19:06 | comment | added | David Karam | If I can find a EUR equivalent to VTIP, I'd probably be done. I'd then hold 70/30 or something like that in VTIP and its EUR equivalent. As mentioned above though, IBCI has way longer maturities and I feel I could be left holding the bag. EUR cash could be an option given I'm less worried about inflation in EU vs. the US. In all cases, thanks for sharing your thoughts. If I were in a position to lock in rates via a lease or a house mortgage I agree that would have been the best hedge. I cannot though. So I'm just seeking some safety from any potential storms. | |
| May 3, 2021 at 19:03 | comment | added | David Karam | I'd like to start a tech company for which I'd like to defer raising money to retain equity for myself. I don't mind plugging my entire savings in it (minus rent and food for ~3 years) so my main concern is retaining enough purchasing power for myself and the startup to have a longer runway. The reason I seek currency diversification is because I worry about USD devaluation given the current monetary and fiscal policies. Of the major currencies, US has the most aggressive stance and it's a real concern for me and not sure there are good ways to hedge it other than holding different currencies. | |
| May 3, 2021 at 18:56 | comment | added | David Karam | Thanks Grade Bacon. Replying to your question above, my strategy currently is mostly VTIP (inflation protected, 2.5 yr avg. maturity). Some other currencies like CHF and EUR in cash because I couldn't find short term inflation protected bond instruments for those. Gold is a small percentage that is sort of a legacy holding which I don't mind selling. Commodities I have never touched but had just heard it was a good inflation hedge as well. So it's not as contradictory as it sounds, those were mostly just probing questions. | |
| May 3, 2021 at 18:51 | vote | accept | David Karam | ||
| May 3, 2021 at 15:44 | history | answered | Grade 'Eh' Bacon | CC BY-SA 4.0 |