Warren Buffett is the sixth richest person in the world — behind Elon Musk, Bernard Arnault, Jeff Bezos, Larry Ellison and Bill Gates — with an estimated net worth of around $118 billion, according to the Bloomberg Billionaires Index.
Unlike some of his billionaire contemporaries, the Berkshire Hathaway CEO seems to enjoy living a simple life, and his strategies for smart investing and amassing wealth don’t sound overly complicated — even during times of inflation.
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While very few people share Buffett’s investing prowess, the billionaire believes it’s still possible to protect yourself against inflation if you follow one of his core philosophies.
“The best thing you can do is to be exceptionally good at something,” he said during last year’s Berkshire Hathaway annual shareholders meeting. “[People] are going to give you some of what they produce in exchange for what you deliver.”
Skills are inflation-proof
Buffett says you can mitigate the impacts of inflation by focusing on continuous self-improvement and staying on top of the game in your chosen field.
“Whatever abilities you have can’t be taken away from you. They can’t be inflated away from you,” he said. “The best investment by far is anything that develops yourself, and it’s not taxed at all.”
That could mean getting a college degree, completing training courses, working with a mentor or simply reading more and educating yourself about different cultures, languages, innovations and so on.
The 92-year-old says you don’t need to go out of your way chasing skills that don’t serve you well, especially in these tricky inflationary times. Instead, he says, you should aim to do everyday things exceptionally well. For instance, he thinks strong communication is one of the most important skills out there.
“One easy way to become worth at least 50% more than you are now … is to hone your communications skills,” he previously said in a video posted on LinkedIn.
“If you can’t communicate, it’s like winking at a girl in the dark — nothing happens. You can have all the brainpower in the world, but you have to be able to transmit it, and the transmission is communication.”
Of course, surviving through inflationary times requires a little more than just strong communication skills. Once you’ve invested in yourself, you may want to consider investing in some of these other popular hedges against inflation.
Gold
Gold is a great hedge against inflation because its purchasing power has remained stable over time.
“The worth of a dollar can be weakened by inflation, but gold provides you with an edge to combat that decrease in purchasing power,” William Bevins, CFP, CTFA, told CBS News.
One can directly invest in gold by buying it in its physical form, either as bars, coins or jewelry.
Investing apps can also help you invest in the commodity by purchasing shares of gold mining companies on the stock market. For those looking for more diverse exposure, you can also invest in gold exchange-traded funds.
You may also want to consider opening a gold IRA, an individual retirement account that allows you to invest in precious metals in physical forms, like coins, instead of stocks, mutual funds and other traditional investments.
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Real estate
Real estate has also been touted as a time-tested hedge against inflation.
If you want your real estate portfolio to grow beyond your home, you can invest in a residential real estate investment trust (REIT). REITs are publicly traded. They collect rent from tenants and pass that rent on to shareholders in the form of dividends.
Consider also using an online crowdfunding platform. These allow investors to pool their money together to buy property (or a share of property) as a group.
If you don’t want the pressure of making investment decisions yourself, investing apps and online platforms can help you invest in diversified real estate portfolios in ways that will seek to maximize your returns while keeping your fees low.
Fine wine
Humans have been enjoying wine for thousands of years. While most collect wine for consumption rather than investment, bottles of fine wine become more scarce and potentially more valuable as time goes by.
Wine assets have enjoyed consistent double-digit growth over the past 10 years, beating inflation while outperforming many mainstream investment classes.
You can invest in wine by purchasing your own bottles, but keep in mind you’ll need a place to store them properly. Residential wine cellars can cost tens of thousands of dollars. If not stored at the right temperature or humidity, the bottle could be compromised.
If you lack the time and space to curate and store your own wine portfolio, a wine investing platform can help in terms of choosing, storing and insuring your bottles. It’ll even let you know when it’s the best time to sell.
Art
If you aren’t ultra-rich, you might think that investing in fine art by the likes of Andy Warhol, Banksy or Pablo Picasso would be out of your reach — but today, there are online art investment platforms where you can get yourself a piece of the multi-billion dollar industry.
These platforms allow you to bypass a lot of the drawbacks of investing in physical pieces of art. For instance, you won’t need to scour galleries to find what’s right for you, or worry about logistics like shipping, handling and securing a temperature-controlled storage space.
Be mindful that these platforms are still quite new, exclusive and typically only open to accredited investors.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
