Lady's pawn-Investment to beat inflation-blogs Expansion.com

It has become the enemy to beat. Inflation is a real cancer for savings, and in fact it is called the silent tax because it is very harmful and its effects are not immediately perceived. A salary of 1,000 euros, with inflation of 5.6% like the one we have, becomes one of 944 euros in just one year, with a progressive effect in the following years.

Its consequences are particularly damaging in a country such as Spain where half of the families' financial wealth is in cash or in bank deposits, which offer virtually no return in a low-rate environment. And although Luis de Guindos and Pablo Hernández de Cos predicted, during the Financial Meeting held by EXPANSION, that inflation will moderate in the middle of 2022, the time has come for savers to make decisions to alleviate the 5.6% bite inflation will give in the ability to buy their money.

Let's look at some investment alternatives.

1. Housing. It is one of the best options because real estate is a natural protection against inflation, as rents tend to rise when prices do. Buying a home and renting it will work very well in the long term if the investment is adequate.

It is true that we are living a certain boom with the sale and granting of mortgages at maximum rates, but still buying a flat in Madrid for rent yields 6%-above inflation-a percentage that rises to 7% in districts such as Villaverde, Vallecas and Usera. Also in Barcelona, interesting returns of the 6% environment can be achieved in peripheral neighborhoods such as Sant Andreu, Sants-Montjuïc, Horta-Guinardo and Nou Barris.

Savers who do not wish to make a large expense on the purchase may choose to invest in Socimis or real estate funds, which have the advantage of being highly diversified, thus reducing the risk.

Peón de Dama - Inversiones para batir a la inflación - Blogs Expansion.com

2. Bonds linked to inflation. This is an instrument specially designed to beat the rise in prices. They offer in principle a smaller return than other bonds, but are then updated with the rise of the bond itself according to the CPI. If, for example, €10,000 were invested at an interest rate of 2 per cent, 200 euros of return would be obtained, but if inflation went up by 5 per cent, capital was adjusted and the capital grew to 10,500 euros. There is also a risk that it could fall if inflation drops.

There are many international managers who offer inflation-linked bond funds, but they also market these types of Spanish products such as the CaixaBank Smart fixed inflation income or the Sabadell Euro inflation bonds.

3.values with high dividends. If you want a little more spicy for money, the stock exchange is a good option, and within it the sectors that best behave in the face of inflation are those of raw materials, oil, gas, car and banking. Also interesting are the values that operate in sectors with entry barriers, high margins and the ability to set prices such as Cellnex, Grifols, LVMH or L 'Oréal.

If you are looking to invest in stock exchange with parachutes, companies with high dividends are suitable. There are 12 companies in Ibex that offer a dividend return of between 5% and 8%: Enagás, ACS, Telefónica, Mapfre, Repsol, CaixaBank, Endesa, REE, Santander, Naturgy, BBVA and Acerinox.

4.Thematic and global funds. The funds are booming-their equity has grown by 15% this year-because they offer more profitability than deposits and are more stable than stocks. Analysts advise global funds to reduce risks and not concentrate all investment in a single country. A very popular alternative in recent years is thematic funds, and more specifically those specialising in technology, health sciences, renewables and sustainability. The latest invention is mega-trend funds that invest in key areas for the future such as climate change, demography, digitization or health.

5. 'Unit linked' and pension schemes. Insurers also have financial products that manage to beat inflation like the unit linked. This vehicle invests in a basket of funds or shares, while at the same time having life insurance. Unlike investment funds, the unit linked allows for an express designation of heirs and has better taxation.

If the retirement horizon is still long, the pension schemes most exposed to the stock exchange are adequate, with an annual return of 14%. Its great appeal was always taxation, but the tax relief will fall from January to EUR 1,500.

6. Gold. Although this year's development has been quite discreet, due to competition from cryptocurrencies, gold has traditionally been a safe haven, especially if inflation is expected to be durable.

Experts advise having between 5% and 10% of the wealth in physical gold, which, while it does not allow a return through dividends, does offer a good revaluation.

A manager advised, at the expansion Financial Meeting, that the investment should be made on a regular basis (monthly or quarterly) and have a diversified portfolio in several funds or with several types of assets.