Weekend Reading: What Investments Actually Beat Inflation Since 2020?
This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
How did surging inflation really affect your investments? Beginning in early 2020, the COVID-19 pandemic prompted interest rate cuts followed by increased money supply, which then led to skyrocketing inflation. Up until 2023, TIPS (Treasury Inflation-Protected Bonds), cash, stocks, real estate, traditional bonds and commodities all fared differently.
READ THE ARTICLEHere are the performance results:
📌 Cash: Offered a steady +6.33 percent return, but lost ground to inflation over the long term.
📌 Stocks: Despite volatility, stocks provided a significant real return of +49.32 percent.
📌 Real estate: When measured by a diversified index fund, real estate performed poorly due to the impact of COVID and interest rate hikes (+3.59 percent).
📌 TIPS: While TIPS returned +11.17 percent, the fixed nominal return was affected by rising interest rates.
📌 Bonds: With no inflation protection, bonds returned -5.27 percent.
📌 Commodities: Showed high returns (+42.36 percent), but with volatility and lack of income generation.
Your biggest lesson here should be the importance of investment diversification and having a personalized framework to follow, as both will help keep you on track in the midst of inflation and interest rate cycles.