Concerns about rising inflation, interest rates and global geopolitical uncertainty might have you feeling uneasy about your money. Are your retirement savings protected in the event of a stock market crash or prolonged economic downturn? Believe it or not, there are some lesser-known short-term investments that can increase reward and decrease risk to safely grow your money during turbulent times, while also providing you the opportunity to reinvest when the economic landscape stabilizes.
Investing Is a Double-Edged Sword
High inflation and market volatility make having a diversified investment strategy vital to long-term financial success. By investing both in the stock market and in other alternatives, you get the diversification you need to weather a market downturn. Every investment type is a double-edged sword. If you pull out of the market and retreat strictly to cash, inflation will suck the life out of your money. And if you invest everything you own into a down market, you may compound your losses.
Don’t Sit on the Sidelines Out of Fear
Investors with a lot of cash are sitting on the sidelines. This is something we haven’t seen since the Great Recession. People are nervous. In a low inflationary environment, sitting on the sidelines in all cash may work, but with inflation rates around 8%, people need to find alternative means to grow their wealth. Sitting in cash guarantees your dollars are losing value according to whatever the inflationary rate is. There are places to “park” your money, obtain guaranteed yield and help fight inflation. One key to retirement planning is making sure your dollar is appreciating.
Subscribe to Kiplinger’s Personal Finance
Be a smarter, better informed investor.
Save up to 74%
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of Kiplinger’s expert advice on investing, taxes, retirement, personal finance and more – straight to your e-mail.
Profit and prosper with the best of Kiplinger’s expert advice – straight to your e-mail.
Here Are Some Short-Term Investment Options
Series I savings bonds (opens in new tab) are low-risk savings products purchased directly from the government, backed by the U.S. Treasury Department and designed to protect against inflation. The yield is determined by a fixed rate, which remains the same for the life of the bond, and an inflation rate, which is based on the consumer price index (CPI). Twice a year, the Treasury sets a new inflation rate for the next six months. Series I bonds were designed …….