If you’ve ever worried about seeing your money lose value while prices keep going up, you’re not alone. Inflation doesn’t just nibble away at your savings—it can take big bites unless you act early and think differently. Let’s skip yesterday’s advice about stuffing gold bars under your mattress. Instead, I want to show you five strategies that go well beyond those well-trodden inflation hedges, focusing on new angles to preserve and grow wealth.
“I am more concerned with the return of my money than the return on my money.” You might recall this advice from Mark Twain, and it’s especially relevant when inflation surges. But how do we balance keeping our money safe with the need for growth, particularly as some assets lag behind when prices rise faster than usual?
One overlooked move is using floating rate bond funds instead of typical bonds. Fixed-rate bonds can get hammered if inflation forces rates higher because those old, low interest payments lose appeal fast. Floating rate bond funds work differently—they adjust their payouts up and down, usually every quarter, based on prevailing rates. Picture a bank loan fund that resets every three months—if rates leap, so does your income. These funds typically extend loans to companies, so there’s some risk, but their flexibility means they’re built for inflation-charged environments. Why settle for static returns when the market itself is changing all the time?
Suppose you’re tempted to dive into commodities when costs spiral. Rather than chasing raw materials, consider owning stocks of producer companies instead. It’s a counter-intuitive approach: fertilizer producers, energy drillers, and copper miners often profit more directly when commodity prices climb. Not only do their costs adjust, their ability to raise prices is baked into their business model—and if you own their shares, you can benefit without the hassle of buying and storing physical goods. If you had invested in an agricultural fertilizer company during a sharp uptick in crop prices, you’d have seen earnings rise faster than agricultural commodities themselves. Are there other companies poised to ride the next inflation wave that you might have overlooked?
To quote Warren Buffett, “Price is what you pay. Value is what you get.” That rings especially true with real estate—but the trick is to look for properties where leases reset quickly. Most people think of owning residential or commercial real estate for the long haul, but what about self-storage? These businesses sign tenants to monthly agreements, meaning if inflation spikes, owners can raise rents almost instantly instead of waiting years for a lease to expire. This agility offers a real edge: each month is a chance to reprice for real returns. If you’re evaluating real estate, do you weigh the lease terms as much as the location?
Treasury Inflation-Protected Securities (TIPS) aren’t new, but using a laddered approach makes them much more powerful. Instead of buying a single TIPS fund, purchase individual bonds maturing in consecutive years. If you build a five-year ladder, each year one matures, providing predictable income adjusted for inflation. It’s like having a personal line of defense timed to match your spending needs. Best of all, each rung on the ladder keeps up with rising costs, so you’re never stuck waiting for your whole investment to become liquid. How often do you review your own bond allocations for sensitivity to inflation?
Now, let’s talk business models. Not every company is built to withstand inflation, but those with automatic price adjustment mechanisms often thrive. Take toll road operators or essential service providers—many have contracts or fee structures allowing for regular increases in line with official inflation figures. They don’t have to renegotiate prices; it’s written into agreements. When inflation jumps, revenue does too. Own shares in such a business and you might notice your returns insulated from the usual drag. Can you identify other companies with those pricing powers baked right in?
“Inflation is taxation without legislation.” Milton Friedman was blunt about its effects. If we want to take control, a key step is assigning part of your portfolio to explicit inflation hedges, say 10-15% depending on risk tolerance. This proportion guards against bigger losses during times when traditional assets lag. Don’t set these allocations once and forget them—review every few months, looking not just at market performance but also at how sensitive holdings are to current inflation rates. Would you know which assets in your accounts are most exposed?
Another practical step: use TIPS not as your entire bond sleeve, but to match spending needs over the next few years. If you expect expenses over that window, holding laddered TIPS lets you lock in real returns. For longer-term growth, focus on equities with pricing power—companies able to shift costs to consumers without seeing demand crater. It’s a subtle but crucial distinction: not all stocks react the same way to rising prices. When sorting through possible investments, do you ask whether a business can pass on costs effectively?
Periods of high inflation often see markets moving erratically. That’s why rebalancing inflation hedges as consumer price trends change is so important. If inflation moves down after a spike, some positions may become less attractive. Sell excess exposure and redirect to sectors that look more promising. Automatic adjustments avoid emotional, panicked reactions—think of it like resetting your sailboat’s course as the wind changes.
If you’re looking for something truly unconventional, consider adding commodity producer stocks rather than commodities themselves. The companies often have more flexibility and upside than the materials they sell. Or take the strategy of acquiring real estate with short-term rental cycles—most people think of property ownership as a set-it-and-forget-it investment, but shifting to assets with rapid repricing potential can provide protection the market often ignores. Have you considered ways to directly link your income streams to inflation’s rhythm?
There’s wisdom in the world’s great thinkers when it comes to money: “Do not save what is left after spending, but spend what is left after saving,” cautioned Warren Buffett. Structuring your financial plans to keep inflation at bay means paying yourself first—not just with cash in the bank, but in assets resilient to changing costs.
To summarize, the key inflation-proofing strategies I recommend center on agility, adaptability, and a willingness to look past the usual suspects. Floating rate bond funds shine when rates rise. Producer stocks transform price volatility into shareholder gains. Real estate with fast-resetting leases lets you chase inflation, not lag behind. TIPS ladders give you predictable, inflation-indexed cash flows. And businesses with built-in price adjustments—and stocks of those firms—provide assurance their profits will outpace inflation, not just survive it.
Can you see where your current strategy might need a tune-up for the next round of inflationary pressures? Has your view of what it means to “hedge” changed after hearing about these less familiar tactics? I encourage you to think about the connections between your asset choices and the unpredictable nature of inflation, and to act well before the next round of price increases diminishes your purchasing power. The best defense, as always, is a good strategy—one that isn’t afraid to be a little different.
“Inflation is the crabgrass in your savings.” Robert Orben’s humorous take gets at the everyday frustration we all feel watching hard-earned money fade away. With the right approach, that crabgrass can be pulled up—root and all—before it threatens your financial future. So, the next time you check your portfolio, ask yourself: are you truly ready for the next round of rising prices?
