Inflation-Proof Your Investment Portfolio

Inflation-Proof Your Investment Portfolio

May 30, 2023

As companies push higher prices to protect their profits, inflation remains a significant concern for investors. 

Higher prices have bolstered corporate profits, even as some of the costs of doing business have fallen in recent months.

The main suspects differ across party lines. Many economists and politicians say inflation has been caused by government spending and various aid programs (stimulus checks, student debt forgiveness).

Many other economists and politicians point to the war in Ukraine (for pushing up oil prices), and also greedy companies, many of which have been bringing in record profits despite tales of supply chain snarls and rising costs. But whoever is to blame, the fact remains: we are feeling the pinch.

What is Inflation?

Inflation is a broad and sustained rise in the prices of products and services that people use every day. It aims to measure the overall impact of price changes for a diversified set of products and services. It allows for a single value representation of the increase in the price level of goods and services in an economy over a period of time.

Its impact is often viewed through the lens of your household budget, as each paycheck purchases fewer of the same items it once did. But inflation can also affect the normal functioning of the economy and investment portfolios. 

Here, we cover some of the effects of inflation in light of the recent spike and what it means for your investment portfolio.

What does inflation mean for your investments?

All investments – from cash and fixed income securities to mutual funds, and stocks to cryptocurrencies – come with their own set of risk and reward characteristics.  Understanding the relationship between risk and reward, and your individual comfort level with both, is a crucial part of building your investment portfolio. The rate of inflation represents the rate at which the real value of an investment is eroded and the loss in spending or purchasing power over time.

In other words, if your investments aren’t inflation-resistant, the value of your portfolio will gradually decrease. 

On the other hand, some areas of the market may benefit from rising inflation, including commodities and commodity-related stocks, as well as real estate. To preserve the value of your investments, consider investing in inflation-proof assets that tend to perform well even in an unstable economy.

I Bonds

U.S. Treasury issues these savings bonds specifically designed to protect against inflation. They have a unique yield of a fixed interest rate and an inflation-based component that adjusts every six months. The inflation-based element is contingent on changes in the Consumer Price Index (CPI), a widely used measure of inflation.

By investing in I Bonds, investors can earn a return that outpaces inflation, helping to preserve the value of their investment over time. However, it's important to note that I Bonds have some limitations. For example, they have an annual purchase limit of $10,000 per Social Security Number, and they cannot be redeemed for the first 12 months after purchase. Additionally, depending on their specific investment goals and risk tolerance, there may be better fits for some investors. 

As of April 2023, I bonds have a savings rate of 6.89%, including a fixed rate of 0.40%. Ultimately, whether or not I Bonds is a good fit for your portfolio depends on several factors, including your investment goals, risk tolerance, and current market conditions. Working with a financial advisor can help you evaluate your investment strategy that aligns with your needs and goals.


Real Estate Investment Trusts (REITs) are investments that own and operate income-producing real estate properties, such as apartment complexes, shopping centers, and office buildings. REITs typically offer high dividend yields and can provide investors with a steady source of income. REITs are often considered a hedge against inflation because real estate values and rental income tend to increase during rising prices.

There are four types of REITs:

  • Equity REITs - The majority of REITs are publicly traded equity REITs. Equity REITs own or operate income-producing real estate.
  • mREITs - also known as mortgage REITs provide financing for income-producing real estate by purchasing or originating mortgages and mortgage-backed securities and earning income from the interest on these investments.
  • Public Non-listed REITs - non-listed REITs (PNLRs) are registered with the SEC but do not trade on national stock exchanges.
  • Private REITs - Private REITs are offerings exempt from SEC registration whose shares do not trade on national stock exchanges.

Many REITs have built-in inflation protection mechanisms, such as rent escalation clauses in their leases, which allow them to increase rents in response to rising inflation. Ultimately, REITs can help ensure that their rental income keeps up with the pace of inflation, providing investors with a steady source of income while also benefiting from the potential for long-term growth. 

As with any investment, it's essential to carefully evaluate the risks and potential rewards of investing in REITs and to work with a financial advisor to develop a comprehensive investment strategy that aligns with your unique needs and goals.


Commodities are another popular option for investors looking to protect their portfolios against inflation. Commodities are physical goods often used to produce other goods and services, such as oil, gold, and wheat. However, investing in commodities can also be done through exchange-traded funds (ETFs) or futures contracts. ETFs track the performance of a specific commodity or a basket of commodities, providing investors with diversified exposure to the commodity markets. 

During periods of inflation, the prices of commodities often rise as demand increases and the purchasing power of currencies declines. This can make investing in commodities an attractive option for investors looking to hedge against inflation. Investing in things can also be risky, as prices can be volatile and subject to various market forces. Additionally, commodities can be more challenging than other asset classes, as they often require specialized knowledge and access to specific markets. 

As with any investment, it's essential to carefully evaluate the risks and potential rewards of investing in commodities and to work with a financial advisor to develop a comprehensive investment strategy that aligns with your unique needs and goals.

Savings, CDs, and Money Market Accounts

Traditionally, savings, CDs, and money market accounts have yet to be considered high-growth investments. However, as inflation rates have risen, these lower-risk options have become more appealing to investors seeking to protect their portfolios. Finding savings accounts with interest rates from reputable banks in the 4% range is now possible, providing a competitive return on cash holdings. 

While these types of accounts may not offer the potential for high returns like riskier investments, they can provide a stable income source and help preserve the value of your savings over time. As with any investment, it's essential to carefully evaluate the risks and potential rewards of investing in savings, CDs, or money market accounts and to work with a financial advisor to develop a comprehensive investment strategy that aligns with your unique needs and goals.

Final Thoughts

With inflation rising, many of us feel the pinch of higher prices and dwindling purchasing power. If you're concerned about the impact of inflation on your retirement savings, consider inflation-proof investments like the options listed above. However, evaluating your investment options and developing a comprehensive strategy that aligns with your unique needs and goals can be complex. 

That's where working with a trusted Fiduciary advisor can be invaluable. An experienced financial professional can help you navigate the markets, adjust your asset allocation, and develop a plan to weather inflation and other market forces. Ultimately, working with a Fiduciary Advisor can help investors navigate complex market conditions and make informed investment decisions that can help protect and grow their wealth over time.

At Agemy Financial Strategies, we provide tailored solutions for your investment portfolio, retirement plan and lifestyle management needs. Our first priority is helping you take care of yourself and your family. We want to learn more about your personal situation, identify your dreams and goals, and provide you with the highest level of service.

Whether you're looking to help protect your nest egg against inflation or revise your current plan to make smart amendments, we're here to help. 

Connect with our team today to develop a comprehensive investment strategy for a stress-free retirement.