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Humility might be the best medicine in times of economic hardship. Economist and former Pacific Investment Management Company (PIMCO) CEO Mohamed A. El-Erian published an admonition about the American economy amidst the Iran war in Project Syndicate (1).

“While much of the world braces for the fallout of the Iran war, the U.S. might be tempted to tout its relative economic strengths, not least its energy independence,” El-Erian wrote in a recent article for Project Syndicate. “Against this backdrop, what the U.S. needs from its policymakers is not hubris, but humility and decisive action aimed at protecting those who need it most.”

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Historically, the U.S. has managed to rebound from the toughest of economic trials. According to data from the International Monetary Fund (IMF), despite the economy contracting during the Great Recession, it still averaged an annual GDP growth of 1.48% from 2007 to 2020, when compared to only 0.59% for the eurozone.

The IMF also found that the COVID-19 pandemic’s economic disruption did not derail the U.S. for long, as “a robust recovery meant that growth averaged 3.27% in 2021-25,” which, again, outpaced the eurozone’s 2.63%, El-Erian reported.

While American energy independence helps the country avoid the supply shortages that are afflicting Asia and Europe, while weathering the higher energy and borrowing costs spilling over from the Iran war, that doesn’t mean the economy is immune to war.

“Even if the US economy continues outperforming its peers, it will not necessarily remain insulated from the war’s adverse effects,” El-Erian wrote, citing higher energy and borrowing costs as added pressures to the cost-of-living rise Americans are already facing.

According to the Bureau of Labour Statistics, the Consumer Price Index (CPI) increased by 3.3% for the past year, ending in March (2). This makes it the sixth consecutive year of the Fed missing its 2% target.

Mark Zandi, chief economist at Moody’s, told CNBC he doesn’t expect inflation to decelerate, saying that inflation is “stubbornly high, especially for necessities,” adding that “of course, this is all before the fallout from events in the Middle East” (3).

With higher energy prices likely to lead to increased price hikes, it’s clear that the U.S. isn’t guaranteed to stay ahead in terms of its economy during the war.

What began as a surge in gas prices in the first three weeks of the war “will soon be translated into higher costs for a wide range of goods, from semiconductors and fertilizers to airplane tickets,” El-Erian said.

Read More: Robert Kiyosaki warned of a 'Greater Depression' — with millions of Americans going poor. Was he right?

As inflation increases alongside the risk of financial instability, Americans are seeing the impact in their daily lives.

As the conflict in the Middle East shifts, it’s important to evaluate your finances accordingly and make lifestyle changes to adapt — even in the short term — to the higher cost of living. And with the U.S. currently blockading the Strait of Hormuz, the impact on inflation might be stickier than expected.

One way to shield yourself from the adverse effects of inflation is to invest in assets that tend to hold up their value during such times. Gold, for instance, has long been considered an asset that acts as a hedge against inflation. And during times of tumultuous economic conditions, the precious metal often outperforms relatively higher-risk assets like equities.

This has played out in real time over the past year. Gold spot prices surged by more than 54% over the past year, while the benchmark S&P 500 price return was about 28% over the same period (4, 5).

If you wish to add gold to your portfolio, but don’t want to deal with the hassles of storing the precious metals, consider opening a gold IRA with the help of Priority Gold.

Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, thereby combining the tax advantages of an IRA with the protective benefits of investing in gold.

If you opt for Priority Gold’s platinum package, you can get free account setup and insured shipping and storage for up to five years. Plus, you can also rollover your existing IRA or 401(k) into a precious metals IRA with Priority Gold — tax and penalty free.

What’s more, when you make a qualifying purchase with Priority Gold, you can receive up to $10,000 in precious metals for free. Just keep in mind that gold is often best used as one part of a well-diversified portfolio.

Real estate has long been viewed as a classic hedge against inflation. As the cost of materials, labor and land rises, property values often climb as well. That means homeowners may see the value of their properties increase even as the purchasing power of cash declines.

Rental income can also help keep pace with rising prices. When inflation pushes up everyday costs, landlords often adjust rents over time to reflect higher expenses.

But becoming a landlord comes with added responsibilities — a hefty down payment, monthly insurance and maintenance expenses, and the burden of property management.

For those who want to invest in real estate but don’t want the added headaches, platforms like Arrived make it easier to slice yourself a piece of that pie.

Backed by world-class investors like Jeff Bezos, Arrived allows you to invest in shares of rental homes with as little as $100, all without the hassle of mowing lawns, fixing leaky faucets or handling difficult tenants. No midnight maintenance calls here.

Once you find a property you like, select the number of shares you’d like to purchase, and then sit back as you start receiving any positive rental income distributions from your investment.

Even better, for a limited time, when you open an account and add $1,000 or more, Arrived will credit your account with a 1% match. This can give you a boost right out of the gate.

But there are plenty of real estate investment opportunities out there, so long as you know where to look. Many opportunities are marketed to accredited investors, but not all opportunities are created equal.

For instance, if you want to move beyond single-family properties, you could instead leverage multifamily real estate investing. At least for those with capital on hand.

In a report prepared by JPMorgan, Al Brooks — the firm’s vice chair of Commercial Banking — noted that, "multifamily housing is absolutely where you want to be as an investor” (6).

Accredited investors can now tap into this opportunity through platforms such as Lightstone DIRECT, which gives accredited investors access to single-asset multifamily and industrial deals.

Lightstone DIRECT’s direct-to-investor model ensures a high degree of alignment between individual investors and a vertically-integrated, institutional owner-operator — a sophisticated and streamlined option for individual investors looking to diversify into private-market real estate.

With Lightstone DIRECT, accredited individuals can access the same multifamily and industrial assets Lightstone pursues with its own capital, with minimum investments starting at $100,000.

Beyond the typical slate of alternative investments, there are other options for those who want to get truly creative with their portfolio mix. In particular, there’s one globally recognized asset class that has low correlation with the S&P 500 and tends to hold value well while appreciating over time.

Even better, due to its worldwide renown, there’s some in-built resilience to fluctuations in American markets.

The choice asset in question? Post-war and contemporary art.

Until recently, this world was off limits to most retail investors. But now, Masterworks has opened the door to investing in art for retail investors — with more than 70,000 users following suit since 2019. Now, it’s possible to own fractional shares of works by Banksy, Basquiat, Picasso and more — depending on availability.

Masterworks has sold 27 artworks so far, yielding net annualized returns like 14.6%, 17.6% and 17.8% among assets held for longer than a year.

Even better, Moneywise readers can get priority access to diversify with art and skip the waitlist to see what’s on offer.

Note that Past performance is not indicative of future returns. Investing involves risk. You can see important Regulation A disclosures at Masterworks.com/cd

Even if the war ends tomorrow, consumers shouldn’t expect prices to fall overnight.

“I don’t think we’re going back to the pre-war prices for the foreseeable future. Certainly won’t be this year, won’t even be next year,” said Mark Zandi, chief economist at Moody’s Analytics, adding, “Might not be ever.” (7)

That’s why taking a closer look at your finances now could pay off. A financial advisor can help you adjust your strategy, find ways to stretch your dollars further and stay on track toward your long-term goals even as costs remain elevated.

Research from Envestnet suggests households that work with a financial expert could see returns up to 3% higher. Over decades, that extra boost can compound into significant gains. After all, time in the market often beats out timing the market.

You can find a vetted FINRA/SEC-registered advisor near you for free through Advisor.com.

Just enter a few details about your finances and goals, and Advisor.com’s AI-powered matching tool will connect you with a qualified expert suited to your unique financial needs and goals. The platform’s advisors are fiduciaries, meaning they are legally obligated to act in your best interest.

Hiring a financial advisor can be a lifelong commitment. That’s why Advisor.com lets you set up a free, no-obligation consultation with your match to see if you’re on the same page.

— With files from Em Norton

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We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

Project Syndicate (1); Bureau of Labor Statistics (2); CNBC (3); APMEX (4); S&P 500 Global (5); JP Morgan (6); Politico (7)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.