5 Strategies to Inflation-Proof Your Portfolio

Inflation can wreak havoc on anyone's finances as prices rise and the dollar’s value drops to new lows.

All hope is not lost, as several methods exist to shield investment income from dangers.

This article explains in detail five strategies to inflation-proof your investment portfolio.

Fixed Income Treasury Inflation-Protected Securities (TIPS)

TIPS pays out interest twice a year at a variable amount depending on the inflation rate and resulting principal. It's possible to add TIPS to an investment portfolio for 5, 10, or 30-year terms.

As inflation rises, many investors turn to gold as it tends to hold value well. In many ways, it's considered an alternative currency as inflation erodes the dollar or euro.

Gold or Other Precious Metals

Real-Estate Investment Trusts (REITs) and Various Real Estate Investments

Buying into REITs doesn't require actual property ownership but allows investors to reap some benefits. Fortunately, REITs are more affordable real estate investing strategies that don't require the capital needed to buy a property.

Commodities cover a large variety of inflation-hedged asset classes, from raw materials to food and energy sources. Such products tend to see rising prices during inflationary periods and can hedge inflation risk.

Commodities

Unlike growth stocks, which tend to suffer during inflation, value stocks usually fare pretty well. They are not affected by an unfavorable interest rate or changes in sale volume. As other securities stumble, value stocks have risen even when inflation rears its ugly head.

Value Stocks

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