Cryptocurrencies

cryptocurrency coins - Litecoin, Bitcoin, Ethereum
r.classen / Shutterstock

Due to their violent swings in value, cryptocurrencies remain a higher-risk solution to the problem of inflation. But more and more investors — including Jones — are getting onboard.

“We're moving into an increasingly digitized world. Clearly there's a place for crypto, and it's winning the race against gold,” he says.

“Crypto would be my preferred inflation hedge over gold at the moment.”

There are many ways to play the crypto boom. For instance, ProShares Bitcoin Strategy ETF holds bitcoin futures contracts that trade on the Chicago Mercantile Exchange.

Investors can also get exposure to Bitcoin through companies that have tied themselves to the crypto market, such as Coinbase, Tesla and PayPal.

Of course, you can also purchase Bitcoin directly. Crypto exchanges often charge up to 4% in commission fees, but some investing apps charge 0%.

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Real estate

Looking Up Blue Modern Office Building
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Real estate has been a popular inflation hedge throughout history. Not only do real estate prices tend to increase in an inflationary environment, but rental properties can also generate a stable income stream for investors.

These days, however, you don’t need to be a landlord to collect rent checks. Publicly traded real estate investment trusts (REITs) own and operate income-producing properties on investors’ behalf.

Jones happens to own quite a few shares in this sector.

According to Tudor’s latest 13F filing with the Securities Exchange Commission, the hedge fund held stakes in Digital Realty Trust, Public Storage, Kimco Realty, Simon Property Group, Vici Properties and National Retail Properties.

These REITs all offer regular dividend payments with yields higher than the S&P 500.

If you want to follow suit, some popular investing services let you lock in a steady income stream by investing in premium real estate — from commercial developments in L.A. to residential buildings in N.Y.C. You'll receive regular payouts in the form of quarterly dividend distributions without any headaches or hassles.

Fine art

Andy Warhol soup painting
Luke W. Choi / Shutterstock

This one is often overlooked. But, with inflation on the rise, Bank of America’s chief investment strategist Michael Hartnett said earlier this year that collectibles like wine and art could outperform in the next decade.

Contemporary artwork has already outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.

It also helps that fine art has little correlation with the ups and downs of the stock market and the crypto market.

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Fine art as an investment

Stocks can be volatile, cryptos make big swings to either side, and even gold is not immune to the market’s ups and downs.

That’s why if you are looking for the ultimate hedge, it could be worthwhile to check out a real, but overlooked asset: fine art.

Contemporary artwork has outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.

And it’s becoming a popular way to diversify because it’s a real physical asset with little correlation to the stock market.

On a scale of -1 to +1, with 0 representing no link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.

Earlier this year, Bank of America investment chief Michael Harnett singled out artwork as a sharp way to outperform over the next decade — due largely to the asset’s track record as an inflation hedge.

Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultrarich. But with a new investing platform, you can invest in iconic artworks just like Jeff Bezos and Bill Gates do.

About the Author

Jing Pan

Jing Pan

Investment Reporter

Jing is an investment reporter for MoneyWise. Prior to joining the team, he was a research analyst and editor at one of the leading financial publishing companies in North America. An avid advocate of investing for passive income, he wrote a monthly dividend stock newsletter for the better half of the past decade. Jing holds a Master’s Degree in Economics and an Honours Bachelor of Science Degree, both from the University of Toronto.

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