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Here’s what advisers say about investing during periods of high inflation, and how to find the best stocks for inflation. Satoru Asato, a Bloomington, Minnesota-based certified financial planner with McNellis & Asato, says that “monetary policy is shifting from easy mode to tightening mode,” referring to the Federal Reserve’s five interest rate hikes so far this year.
How to find stocks that do well in inflation Moore and Asato both say that certain sectors — and certain types of stocks — do better than others during inflationary periods.“When Russia invaded Ukraine, prices of food and oil went up. And as the price of gas at the pumps increased, you saw the oil companies do well,” he says.
Real estate investment trusts, or REITs — which invest in rental properties — can provide extra income, as REITs are required to distribute dividends to shareholders. Dividend stocks also give investors a portion of a company’s earnings on a regular basis.The Hartford Funds study supports the real estate idea. It found that rental REITs were the second-best-performing stocks during high-inflation years, after energy stocks.
TIPS try to stay ahead of inflation by having their principal value adjusted every six months based on changes in the CPI. Inflation-protected bond funds use trading strategies to target returns that are at least equal to the inflation rate.