Suze Orman Touts the Only Asset Class With a Track Record of 'Earning More Than Inflation'

1. Banks

In her blog post, Orman says investors should be prepared for stocks to go through periods where their value dips.

But that also offers the chance to snap up more top-shelf stocks at bargain-bin prices. When the next pullback happens (and it will happen), there’s one place investors might want to look to first: banks.

Unlike the vast majority of other industries, banks actually fare well when central banks tighten policy because of their asset-sensitive nature. When interest rates rise, bank assets like bonds and loans tend to climb higher than their liabilities such as deposits.

Rising rates also mean that banks can earn a wider spread between what they pay out in savings account interest and what they earn from loans.

Another great thing about is it’s like shooting fish in a barrel. Just pick two or three of the country’s largest banks, like Royal Bank of Canada, CIBC or BMO, and you should have all the positive exposure to rising interest rates you need. You can also consider investing major U.S. banks like Bank of America or JPMorgan Chase, or overseas giants like HSBC, BNP Paribas or Barclays.

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2. Insurance

Even when people slash their budgets to help offset rising prices, we know those auto and life insurance premiums will keep rolling in no matter what.

Which means although insurance may not be the most exciting industry, it’s a defensive business that can provide plenty of portfolio protection — especially since insurers typically earn better returns on their “float” when rates rise.

And on top of that, insurers often pay their shareholders dividends, which means you can count on a little extra cash a few times a year.

For those interested in investing in insurance, Manulife, Great-West Lifeco and Sun Life are the giants in Canada; Chubb, Allstate and MetLife are some of the big, blue-chip names in the U.S.

3. Precious metals

When it comes to investing in precious metals, these stock picks can be worth their weight in gold.

Gold and silver have long been considered safe haven assets, meaning when all else fails, their value doesn’t really tarnish.

You can always buy precious metal bullion or coins, but mining stocks and ETFs allow you to invest in the space at a low cost and without needing to find storage.

Moreover, large diversified mining companies like Rio Tinto and Freeport-McMoRan also dig up metals like copper, which is currently experiencing booming demand due to its role in electric vehicle production. Canada has numerous heavyweight mining companies, including Barrick Gold, Kinross Gold and Teck Resources.

Historically, the best time to make money from metals is when inflation is poised to keep increasing — like right now.

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A finer inflation hedge in 2022

To be sure, Orman’s advice overlooks several attractive inflation hedges outside stock market.

For instance, 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 very 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.

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.