Inflation-proof investments—assets that tend to hold or grow in value as inflation rises—can help. Inflation can seem like a challenge, but with the right strategies, you can protect your wealth and even grow it during inflationary times. Whether you choose stocks, real estate, TIPS, crypto, or global investments, learning how to hedge against inflation is one of the smartest financial moves you can make. TIPS are considered low-risk investments and are a great option for conservative investors looking for inflation protection. They can be easily added to your portfolio through ETFs or mutual funds that focus on inflation-protected securities.

What Is Inflation Protection Home Insurance?

Leveraged loans as an asset class are typically referred to as collateralized loan obligations (CLOs). The investor receives scheduled debt payments from the underlying loans. CLOs typically have a floating rate yield, which makes them a good hedge against inflation.

• Stocks hedge against inflation in two main ways, i.e., stocks pay a dividend, and they grow over time.
• People who ignore that slow leak wake up to find savings weaker and goals farther away.
• Treasury Department that is designed to protect investors from inflation.
• Inflation hedge is an investment that is made for the purpose of protecting the investor against decreased purchasing power of money due to the rising prices of goods and services.
• It means that they are free of default risk, and there is zero risk that the government will default on its obligation.
• There are many ways to hedge against inflation; a disciplined investor can plan for inflation by investing in asset classes that outperform the market during inflationary climates.

Inflation is a natural occurrence in an economy, but inflation hedging can be used to offset the anticipated drop in a currency’s price, thus protecting the decreased purchasing power. Banks typically earn more money as interest rates rise and they are able to profit off a wider spread on what they charge for loans compared to what they pay out for deposits. Gold has traditionally been a safe-haven asset for investors when inflation revs up or interest rates are very low.

The Pros of Holding Gold

Your investment portfolio is susceptible to inflation, which can reduce the real rate of return on your assets. To shield investments from this decline, many incorporate a mix of asset classes like stocks and commodities that historically outpace inflation. Utility stocks are a good way to protect against inflation, at least because they produce dividend yields.

Stocks with great balance sheets

• Savers in bank accounts earn less interest than the pace of price hikes.
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• The opinions expressed on our site are solely those of our expert finance editors and analysts, and they are not influenced by advertisers or external sponsors.
• Investors can gain exposure to commodities through exchange-traded funds (ETFs), commodity futures, or stocks of companies heavily tied to resource extraction.

They are a type of Treasury bond, but unlike conventional Treasuries, how to hedge against inflation TIPS are anti-inflation assets. Inflation as a long-term, sustained process should be distinguished from a one-time increase in prices (due to monetary reform or a political event). Inflation does not mean a simultaneous increase in all prices in the economy because the prices of individual goods and services can go down or remain unchanged. It is important that the overall price level, the GDP deflator, changes. At Cashtopedia, we take pride in our commitment to transparency and editorial integrity.

The Bloomberg Aggregate Bond Index

Equities in sectors less sensitive to inflation, like technology or healthcare, can provide a good inflation hedge, as these sectors often experience robust growth independent of broader economic downturns. From government-backed securities to the diversity of the stock market, each of the following options offers a unique approach to protect your finances against inflation. Fixed-rate debt, such as a mortgage, can become an advantage as inflation effectively reduces the real cost over time. As inflation rates soar to record highs in the U.S., savvy investors are exploring new avenues to preserve their wealth. Look for assets that have their own fundamental value, such as commodities, those that pay interest like REITs, or have a floating rate like CLOs. This fund is very competitive from a cost perspective but not as liquid as some other funds in this category.

As inflation rises, the principal value of TIPS increases, ensuring your investment keeps pace with inflation. The bond pays interest twice a year, and the interest payment is based on the adjusted principal. Energy stocks have benefited significantly during past periods of inflation, as oil, gas, and renewable energy infrastructure often saw sharp price increases during those times.

All are feasible moves for the individual investor to make, though they carry different degrees of risk. A disciplined investor can plan for inflation by cultivating asset classes that outperform the market during inflationary climates. Although traditional bonds are the usual go-to for the income-oriented, they aren’t the only investment that produces a revenue stream. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories, except where prohibited by law for our mortgage, home equity and other home lending products.

However, its excellent expense ratio should more than compensate investors for this disadvantage, making SCHP a worthy choice for any investors looking to enter this corner of the bond market. Too high inflation significantly increases uncertainty for consumers and investors alike. High uncertainty, in its turn, means excessive risk-taking and, as a result, less opportunity to spend and invest. In an administrative-command economic system, the depreciation of money may not lead to a change in prices, but there will be a growing shortage of goods.

Floating-rate bonds

As of August 2025, the one-year Treasury yield was about 3.9%, and if interest rates were to rise, it wouldn’t have much of an effect on your bond’s value since it’s already so close to maturing. However, the biggest cutbacks happen in discretionary spending; that is, people stop buying things they don’t need. On the other hand, businesses that sell things that people need tend to do just fine during inflationary periods.

Companies with a strong market presence and innovative products can be particularly resilient in inflationary climates. For example, Treasury Inflation-Protected Securities (TIPS) are designed to increase in value with the inflation rate, directly mitigating its effects. By keeping up with inflation, you can maintain the value of your money or even generate income.

Here are five of the best inflation hedges to help protect your portfolio against inflation, and two areas that you want to avoid if you think we’re in for a period of sustained inflation. Some insurance policies have a feature called insurance inflation protection, which stipulates that future or ongoing benefits to be paid are adjusted upward with inflation. Inflation protection home insurance is intended to ensure that the relative buying power of the dollars granted as benefits does not erode over time due to inflation. In general, businesses that gain from inflation are those that require little capital (whereas businesses that are engaged in natural resources are inflation losers). Commodities and inflation have a unique relationship, where commodities are an indicator of inflation to come.