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Fighting Inflation Is a Long-Term Struggle. So Why Not Protect Your Portfolio With Long-Term Assets?

AngelaRoberts

Written by Angela Roberts

Nov 17, 2022

Whenever I can, I like to plan ahead. I prefer to keep my eye on the future and do whatever I can to prepare myself and my portfolio for whatever may be headed our way.

For example, I recently read that October’s Consumer Price Index (CPI) data show a small drop in inflation, from 8.2% to 7.7%. And while that shows some progress for our economy, it also presents us with an opportunity to gauge just how long this fight against inflation may last and decide what we can do to protect ourselves in the meantime.

The fight against inflation is expected to last well into 2023, if not longer.

Word "INFLATION" on calculator, pen and notebook, $100 notes

On November 13, 2022, MarketWatch published an article sharing Federal Reserve Governor Christopher Waller’s reaction to the small drop in inflation. According to the article, Waller downplayed the importance of the drop, saying, “It was just one data point,” that “we’ve got a long, long way to go,” and that a 7.7% inflation rate is still “enormous.”

In Waller’s opinion, the “worst thing” the Federal Reserve could do at this point is stop its interest rate hikes—meaning we’ll still be looking at a high cost of borrowing for some time.

Good news or bad, this helps us get an idea of what we can expect in the near future—and perhaps in the long term if inflation remains stubbornly high. And that presents us with an opportunity.

When managing a portfolio—especially for retirement—it helps to think long-term.

Dollar sign pin in paper next to "Long-term plan"

For me, managing a portfolio is all about long-term goals and risk management. I want to make the right decisions today that will pay off decades down the road.

This is especially true when I look at my retirement portfolio. The older I get, the less risk I want to expose that portfolio to, so I look more to long-term assets and hedges against the sort of stock market volatility that can cause serious short-term damage to my savings.

As I’ve discussed in the past, there’s a “Retirement Risk Zone” that stretches 20 years, from the 10 years before retirement to the 10 years after. Any massive market shock incurred during that time is shown to be potentially devastating to a retirement portfolio because it will take longer than during any other period to recoup those losses.

This is why, when it comes to my personal wealth, I prefer to think long-term. So when I read that Waller said, “Everybody should just take a deep breath” and “calm down,” I’m inclined to believe that I should consider this fight against high inflation a long-term factor when examining my asset mix—and that may mean considering relatively lower-risk assets as I continue to build my portfolio.

Gold has proven itself as a long-term asset and has historically been seen as a hedge against inflation.

If I’m looking for a store of wealth that could help reduce my overall risk exposure and hedge against inflation, the one asset I know I’ll be considering is gold. Physical gold, whether held at home in a private safe or in a depository as part of a precious metals IRA, has a long history of growth over the long term—and just as long a history of being used to protect portfolios from the risks associated with stocks and other potentially volatile paper-based assets.

Gold allows me to hold my wealth in my hands, provides peace of mind, and most importantly, helps me protect my wealth over the long term so that factors like this ongoing fight over inflation won’t have as drastic an impact on my portfolio.

To me, physical gold means long-term security. If you feel the same, now may be a great time to consider adding more physical gold to your portfolio.

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