Three ways to benefit from the coming inflation

The world has been experiencing a lot of inflation in financial assets, in the form of higher price of shares and real estate. In normal circumstances, the price of other things in life would also have gone up sharply. This is clearly not as noticeable, mainly due to fact that the whole of China has been working pretty hard. Remember this is a huge country, and it takes a long time for overall costs to go up a notch, which is happening and only recently. From now on, you should expect other forms of inflation to show up, in more and more corners.
Fortunately there are things you can do to mitigate the effect, and even to benefit from it. Here are some of my thoughts.

• In inflationary times, interest rates will trend up. Those who lend money to others with fixed interest (like bonds) will suffer. Note that banks in Singapore lend out money with adjustable rates. So they are more or less protected from inflation, and it is ok to own their shares during times of inflation.

• Inflation will have different impact to different industries. Those which cater to essential needs of people will be able to pass price increases to the customers. Others which are unable to do so will be squeezed and will fall. So you should consider owning market leaders of those industries, which really matter to people.

• Everyone knows that the price of real estate in Singapore is already quite high. But since housing is such an essential item, the price may go even higher, hand in hand with inflation. So if you own real estate, it is a good idea to hold on to it.