What are you going to invest in if inflation continues to rise?
Posted By RichC on September 3, 2021
A friend asked me the other day, “what are you going to do if inflation becomes a bigger problem than it is already?” Good question … the canned answer (safe answer) is to be diversified. The reality is far more challenging.
There was a day when the first reply was to own hard assets like commodities and precious metals. Nowadays, there are far more concerns in giving that advice. For example, energy producers are under long term pressure due to fossil fuels creating carbon and therefore contributing to climate change. Government around the world are increasingly making decisions to move away from oil and gas … therefore making the commodity and companies that produce them concerning in the long run. Gold and silver being precious metals and a way to hedge, have digital replacements in the form of cryptocurrency and NFTs attract investors and at least the blockchain technology behind them has a lot of potential. Add pitifully low bond yields and CD return and that makes finding a safe haven harder than it once was.
The BusinessInsider included a simple “Investment Idea” chart that offers traditional inflation investing advice that I thought might be helpful:
What types of assets are good for beating inflation?
Several asset classes in particular lend themselves to inflation-oriented investing.
- Appreciation-oriented assets: Go for investments that offer growth, or appreciation — not simply income. Company stock is a prime example.
- Real assets: Inflation devalues nominal assets, like CDs and traditional bonds, because they’re priced based on the fixed interest they pay, which will lose value when inflation is increasing. In contrast, real assets are tangible things with fundamental value. So their worth floats up together with inflation.
- Variable interest-rate assets: If something pays a fixed rate, you’ll lose money in an inflationary environment. Assets with fluctuating interest rates give your money more of a fighting chance, as they’ll also rise with inflation.

