How inflation affects your investment?

In some countries, inflation is a serious problem. In others, not so much. Anyway, it’s a key issue that you should keep in mind when overseeing your investment strategy.
Unless you are living in South America, which has a pretty well-known history of record inflation levels, then I suggest you take it easy but without relaxing too much.
Let’s understand what “inflation” actually stands for. Simply said, inflation can be described as the rate at which prices for goods or services are rising. As a result, our money has a lower purchasing power. In other words, your returns should always outperform the inflation rate if you don’t want to end up empty-handed.
If central banks follow up inflation carefully and control it, inflation is not necessarily bad for the economy. The goal behind inflation targets set by regulator is to keep the country running smoothing without overheating or overcooling the economy.
Currently, the Federal Reserve keeps a target inflation rate of 2 percent. On this regard, the Labor Department reported last week a 0.6 percent build in consumer prices for January, doubling the previous growth rate. January’s reading was the highest jump since 2013 and year-over-year, the CPI rose 2.5 percent.
Yes, most of the times inflation is hurting consumers first and we don’t usually associate its effect to investments, although we should. In recent months, inflation growth has been supported by rising energy prices and goods rather than food components, making it less of a threat for regular households. In 2016, inflation amounted a yearly 2.1 percent build.
How to fight inflation? We have picked a few alternatives over here, take a look:

• Housing development: Improving job market and low financing rates make out of this area a real gold mine. According to the National Association of Realtors, the supply-demand dynamic continues to show a respectable relation. If someone is building, investment in builders: SPDR S&P Homebuilders ETF.
• If the United States does not meet Fed’s inflation target, the regulator may have to delay rate hikes for a bit longer. So… What about taking some positions of gold? That’s right, the yellow metal is extremely sensitive to interest rate moves. Fears and uncertainty will support an uptrend. However, keep in mind that a rate hike will push it down quickly.