The best inflation hedge strategy for investors
Ahead of the release of January's Consumer Price Index (CPI) this Wednesday, Providence Financial & Insurance Services president Anthony Zaccaro joins Brad Smith on Wealth to discuss how to hedge your investment portfolio against inflation risks. "If you look at what is the best inflation hedge overall, I gotta call the stock market (^DJI, ^IXIC, ^GSPC) out," Zaccaro says, adding, "When you look at the history of the stock market, [it] has always been a great inflation hedge, especially when you factor in dividends that the market is paying." He explains that this is especially true for younger investors using a dollar cost-averaging strategy: "If you're younger you want to continue dollar cost averaging. When you're dollar cost averaging, just putting in the same amount over and over again, think your retirement plans are having the same money coming out. the math behind that shows that you actually drive the purchase price down. And that's the whole goal of investing: Buy low and sell high." For investors who are closer to retirement, Zaccaro says, "When you're within ten years of retirement, you have to focus on the worst-case scenario, and that might be that we have another market crash ... if that crash happens the day before you want to retire, the year before you want to retire, it may affect your retirement." To watch more expert insights and analysis on the latest market action, check out more Wealth here. This post was written by Naomi Buchanan.
