levine capital signature logo

How Levine Capital Hedges Against Inflation? (And, Why You Should Too)

How Levine Capital Hedges against inflation

Are you protecting your money and financial future from inflation? 

Inflation is one of the biggest threats to finances. Those who are not hedging against it, or benefiting from it could find they are soon in a much more dire position than they realize. 

Here’s why this is so pivotal, how experienced fund managers are navigating this situation, and what you can do too…

Why Hedge Against Inflation?

Why is inflation such a big deal?

Rapid inflation can both be an investor’s best ally and worst enemy. Unfortunately, most are positioned to suffer from it, not benefit from it.

Perhaps the most obvious effect of inflation is the quick rise in living costs. Over the past couple of years, real inflation seems to have been running between 30% to 100% annually. This varies depending on whether you are talking about grocery prices, construction materials, insurance, housing, or gas prices. 

So, that means your money won’t go nearly as far this year. This applies to your income and savings and investment portfolios.

If you only had a 25% financial cushion between your monthly income and expenses, and true inflation is up just 30%, that means you are in the hole by 5% per month. If you start bleeding your savings and retirement accounts to cover that, you are going to be in even deeper money problems. 

Even without touching those accounts, this rapid inflation means your nest egg is already being depleted every day too. If you had $1M in savings for retirement last year, that’s now worth only around $700k or less in real money terms. If this continues, next year it will only buy you $490,000 worth of food and other living expenses. Even if you are making a 4% net return on that money, you are still watching it decline. 

Even proposed anti-inflation measures may just cause more of it. If interest rates rocket, the cost of borrowing, paying existing debts and credit, and buying things will keep going up. It will cost more to bring items to shelves and to deliver them. 

If you do nothing to hedge against inflation you are just in a race to the bottom when it comes to your finances. 

How Levine Capital Hedges Against Inflation

As one of the leading real estate investing companies in Somerset, NJ, and beyond, watching inflation is something we do every day. 

There are several ways that we are hedging against inflation with our own money, and are helping our clients do the same.

Firstly, we are investing in assets that benefit from inflation. Real estate has proven to historically go up in line with inflation, or better. 

So, while our clients’ living expenses may have gone up by 30% over the past year, has the value of homes and rents. In many cases, housing costs have accelerated by more than 70%. 

Whether it is investing directly in physical real estate or mortgage debt, the value of those assets and their performance are improving. 

Secondly, we are investing for passive income. More streams of residual passive income diversify your sources of income. That not only helps offset rising expenses but insulates you from the risk of losing a job or seeing investment in another asset class fail due to high inflation or a recession. 

Thirdly, we stay liquid to quickly profit from increases and reinvest at right the price points to continue to benefit from inflation. If any corrections or distress appear in markets, we have the capital to take advantage of that. Along with the downside protection of hard assets as collateral. 

This all also works in a recession or stagflation situation. 

How You Can Hedge Against Inflation, Recessions & More

Get out of traditional 401ks and public stocks which aren’t keeping up, and can’t protect you from market changes. Diversify, and invest alongside other savvy investors, with great management that has the experience and foresight to stay ahead.

Check out our latest funds and performance updates to see how we are leading private equity firms in hedging against inflation, and everything else that is coming next.