Invest 20,000 euros now to beat inflation? A good goal. Definitely a useful one. With such assets and an inflation rate of currently 7.9%, purchasing power otherwise falls significantly. Achieving a return and a balance is always more important.
Still, the question is how to invest when you have that goal. I have a way that I want to share with you today. Some diversification, but at the same time the selection for the best possible quality would be decisive for me.
Invest $20,000 to beat inflation
With $20,000 to invest to beat inflation, several things are possible. It would be crucial for me that I would build a basket of about 10 different stocks. It’s all about quality, solid protection against inflation, real values and, in some cases, pricing power. You don’t get everything with every share. But there are different options.
For example, I would put half the money in really defensive, quality dividend stocks. For example: The Coca-Cola’s of this world. Inflation is not a problem for them, they pass on the higher costs and inflation rates to their suppliers. In the first half of the year, we see a balance against inflation. Management can turn the price spiral even further, which could lead to growth. At least if it should become necessary.
With the other half of the $20,000 I wanted to invest to protect against inflation, my approach would be to invest in real estate investment trusts. The same applies here: Not in every name, certainly not. but WP Carey is a good, diversified REIT, for example, which also has a contractual clause in 59 out of 100 cases. Accordingly, the contractual rent increases here are based on inflation.
Due to the real estate, REITs also offer a solid, value-preserving character. On the other hand, defensive dividend stocks like Coca-Cola have strong, maximum pricing power. Overall, I would try to identify ten such top stocks. Ideally, half each from both areas.
Other ways are conceivable
At least that would be my way of investing 20,000 euros to protect myself from inflation. Other ways are also conceivable. For example, only quality REITs. Or just defensive dividend stocks. With such wealth, you have a variety of options. For me, it would be crucial to actually achieve compensation against inflation.
The article How I would invest 20,000 euros today to beat inflation! first appeared on The Motley Fool Germany.
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Vincent owns shares in Coca-Cola and WP Carey. The Motley Fool recommends the following options: long January 2024 $47.50 calls on Coca-Cola.
Motley Fool Germany 2022