Inflation has a way of making us all feel a little poorer. As groceries climb, gas prices spike, and everyday essentials take a bigger bite out of our paycheck, it’s natural to wonder: What can I invest in that actually benefits from this?
While most people fear inflation, savvy investors understand that not all assets suffer during rising prices. In fact, some investments tend to perform better when inflation is high. These inflation-resistant assets either increase in value, generate reliable income, or protect your purchasing power in meaningful ways.
At the same time, some assets quietly lose ground, destroying your wealth as inflation eats away at their real value. Let’s explore 7 assets that typically thrive during inflationary periods, and three that may quietly tank while you’re not watching.
Assets That Thrive During Inflation (And What Doesn’t)
1. Real Estate
Real estate is one of the most reliable hedges against inflation. Why? Because property values and rental income often rise along with the cost of living. As prices increase, so does the value of land and homes, especially in desirable areas.
In addition, landlords can raise rents over time to match inflation, giving property owners an opportunity to maintain (or increase) their cash flow. Meanwhile, if you hold a fixed-rate mortgage, your monthly payment stays the same, even as everything else gets more expensive. That means your housing costs shrink relative to inflation.
Commercial real estate and residential rentals both tend to hold up well, particularly when demand for housing is strong.
2. Commodities
When inflation rises, the price of raw materials typically goes up. That’s why commodities like oil, natural gas, gold, wheat, copper, and even livestock can be powerful inflation hedges. They reflect the rising costs of production and consumption across the economy.
Commodity-focused ETFs and mutual funds offer a way to get exposure without buying physical goods. Energy and agriculture, in particular, tend to spike during periods of high inflation, especially when global supply chains are strained. But commodities can be volatile, so they’re best used as part of a diversified strategy, not your entire portfolio.
3. Treasury Inflation-Protected Securities (TIPS)
TIPS are government bonds specifically designed to protect your investment against inflation. Unlike traditional bonds, the principal of a TIPS bond adjusts with the Consumer Price Index (CPI). When inflation increases, so does your bond’s value and interest payments.
They’re a low-risk way to preserve your purchasing power, especially for conservative investors or those nearing retirement. TIPS don’t offer massive returns, but they offer reliable protection in environments where cash and traditional bonds are losing ground.
4. Gold and Precious Metals
Gold has long been considered a safe haven in times of inflation and uncertainty. Unlike paper currency, which loses value as inflation rises, gold tends to retain (or even increase) its worth. It’s seen as a tangible store of value, one that’s not tied to any government or central bank.
While gold doesn’t produce income like stocks or bonds, it offers peace of mind during economic volatility. Silver and platinum also benefit from inflation, though their prices are more closely tied to industrial demand. Investing in physical metals, ETFs, or mining stocks can all give you exposure to this timeless inflation hedge.
5. Stocks in Certain Sectors
While some stocks struggle during inflation, others tend to outperform, especially those in sectors that can pass rising costs on to consumers. These include:
Energy (oil and gas companies benefit directly from rising fuel prices)
Consumer staples (brands that sell everyday necessities with pricing power)
Materials (producers of industrial goods and raw materials)
Utilities (companies that can adjust rates to cover increased expenses)
These companies are often well-positioned to maintain profit margins even when inflation climbs, making their stocks more resilient than others.
6. Short-Term Floating Rate Bonds
Unlike fixed-rate bonds, floating-rate bonds adjust their interest payouts based on current interest rates, which typically rise alongside inflation. This makes them a better choice during inflationary periods when traditional bonds lose value.
Short-term floating rate funds offer investors a way to stay invested in the bond market without locking into low-yield, long-duration risks. They’re a more agile solution that keeps pace with changing economic conditions.
7. Cryptocurrencies (With Caution)
Some investors view cryptocurrencies like Bitcoin as a hedge against inflation, citing their decentralized nature and limited supply. The idea is that, like gold, digital currencies are not subject to manipulation by governments or central banks.
However, crypto’s track record during real-world inflation has been mixed. While it may offer upside potential, it’s also extremely volatile and speculative. For those with a higher risk tolerance, it can be part of an inflation-conscious portfolio, but it shouldn’t be the foundation.
Now for the Assets That Tend to Tank During Inflation
While some assets shine when inflation rises, others suffer (often silently). These investments may seem safe, but they lose real value as the cost of living increases. Here are three of the most vulnerable.
1. Long-Term Fixed-Rate Bonds
Long-term government or corporate bonds lock in interest rates for decades, sometimes 20 or 30 years. When inflation rises, these fixed returns lose their appeal. The bond’s real yield (what you earn after adjusting for inflation) drops, and the market value of the bond often plummets.
If you need to sell before maturity, you could take a serious hit. Even if you hold the bond, the income you earn may no longer be enough to keep pace with rising costs.
2. Cash Savings
It’s essential to have emergency savings, but in times of high inflation, cash sitting in a savings account loses purchasing power every day. Even high-yield savings accounts rarely outpace inflation.
A $10,000 emergency fund might still look like $10,000 next year—but if inflation is 6%, it’s only worth $9,400 in real terms. Over time, this erosion adds up. For short-term needs, cash is necessary. But for long-term wealth building, inflation quietly destroys its value.
3. Fixed Annuities Without Cost-of-Living Adjustments
Fixed annuities may provide guaranteed income, but many do not adjust for inflation. That means the monthly payout that seems sufficient today could feel painfully small 10 or 20 years from now.
If you’re relying on an annuity to cover long-term retirement needs, make sure it includes a cost-of-living adjustment, or consider balancing it with other assets that keep pace with inflation.
Inflation Is a Stress Test for Your Portfolio
Inflation exposes the weak points in your financial plan. If you’re relying on fixed returns, cash, or outdated strategies, you may be unknowingly eroding your own wealth. But if you shift toward assets that grow with inflation (or at least hold their value), you give yourself a real shot at staying ahead of rising costs.
The key isn’t to panic. It’s to diversify. The right mix of real assets, inflation-resistant securities, and active income strategies can protect you in a world where prices never stop climbing.
What’s your go-to inflation hedge? Have you made any changes to your portfolio lately in response to rising prices?
Read More:
Crypto as a Retirement Plan: How to Use Digital Assets for Long-Term Savings
How to Beat Inflation – 10 Actionable Tips
