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14 Expert Tips For Protecting Your Wealth With Inflation On The Rise

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In recent months, the cost of goods across the United States has been increasing. The Consumer Price Index was up 6.2% year over year in October 2021—its steepest increase in more than 30 years. More economists are beginning to speculate that the current spate of inflation may not be a short-term event.

No matter where you are in your professional or retirement life, It’s easy to worry about your assets during signs of inflation. While certain economic trends may cause the average person to watch their spending, it’s a different story when you’re wondering if the money you’re saving and investing is losing its value. So what are the right steps to take to protect your financial standing? Below, 14 members of Forbes Finance Council each share one concrete action you can take to protect your wealth and assets during times of rising inflation.

1. Evaluate Your Personal Budget

Evaluate your personal budget expenditures to look for ways to reduce cash outlays. Consider refinancing loans, consolidating debts for lower rates and paying off debts. Additionally, investing in yourself through continuing education for professional marketability can lead to increased income through new business ventures or supplemental income. – Mara Okita, MWA Architects Inc.

2. Invest In Irreplaceable Items

When inflation hits, the key to prospering is to invest in things that cannot be easily duplicated. Think about land and real estate—or even unique items such as collectors’ edition baseball cards. All of these perform extremely well during crazy times of inflation because they cannot be easily duplicated. – Leo Kanell, 7 Figures Funding


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3. Review Your Investment Allocation

In times of rising inflation, it is good to check in with an advisor to ensure you have the right investment allocation to match your appetite for risk. To illustrate, consider a moderate 60% equities and 40% fixed income asset allocation. If you are income-focused, consider shifting a portion to dividend-paying stocks. In the past, stocks have been able to keep up with inflation better than bonds. – Letitia Berbaum, The Zandbergen Group

4. Understand What Drives Different Assets

Commodities and international equities are worth considering, especially cyclical stocks such as financials, materials and industrials. Don’t be deceived by historical correlation, but understand the underlying drivers of different assets. You may find the correlation between Treasuries and equities to be negative, but when inflation goes up, both these asset classes go down. – Shivam Sinha, Glax Capital LLC

5. Create A Mix Of Investments

Inflation is just one factor to consider when making adjustments to a portfolio. For investors, diversifying across several different types of assets to help withstand a volatile stock market period is essential. I find it’s best to create a mix of investments that differ from each other to keep up with rising prices. – Charlene Wehring, Wehring Wealth Management

6. Look At Short- and Mid-Term Fixed Accounts

When signs of inflation arise and you want to protect your retirement accounts and weather a coming recession, it is smart to take a look at short-term and mid-term fixed accounts, such as two- to five-year fixed annuities. Money market accounts and bank CDs offer little to nothing when it comes to guaranteed rates; however, a short- to mid-term annuity can offer up to 3% fixed returns at current rates. – David Abreu, Pacific United Financial Group

7. Stay Invested In Equities That Grow Over Time

After a long period of low inflation, markets are grappling with changing inflation expectations. Uncertainty is leading to an uptick in market volatility. The wisest thing to do in times like this is to stay invested, with a preference for assets that grow over time, such as equities. Equities perform best when inflation is between 2% and 4%. – Paul Blanco, Barnum Financial Group

8. Choose The Right CD

Rising inflation usually comes with rising interest rates, which is good news for CD owners. Keeping maturities short—for example, six-, nine- or 12-month terms—is recommended. Consumers may also want to consider CDs with unique features. One example is a bump-up CD, which allows the owner to elect to “bump up” the interest rate at one set time during the life of the CD. – David Herpers, Credit One Bank

9. Invest In Entities That Rise With Inflation

With the proviso of considering your financial goals, inflation worries can be mitigated by including in your portfolio Treasury inflation-protected securities, shorter-term bonds, floating-rate instruments such as mortgage-backed securities, and collateralized debt obligations. Beyond that, one might consider investing in commodities, real estate and financial company stocks, as they may rise with inflation. – Tony Sablan, Ultimate Wealth Strategies, LLC

10. Explore Growth Assets

Protect your money by investing in growth assets. Instead of keeping your money in a savings account, use a diversified approach with a mix of assets. Investments need to grow during inflationary periods, especially as they are not increasing in value if held as cash during these periods. Consider equities, real estate and other growth assets. – Sonya Thadhani Mughal, Bailard, Inc.

11. Increase Active And Passive Income

In the face of inflation, I protect my wealth in two ways. First, I own inflation hedge assets such as precious metals (gold and silver). Second, I increase my active income and my passive income at a rate greater than inflation. I believe the real rate of inflation historically is close to 5% annually, so I need an increase in my income of at least that amount every year to outpace it. – Jerry Fetta, Wealth DynamX

12. Know Not All Investments Will Be Affected

The first step is to not panic. Not all investments are negatively impacted by inflation. The next step is to speak with your investment and retirement advisors to make sure that your overall strategy has a plan in place to mitigate the effects of inflation on your investments. If your portfolio is not prepared for this risk, then a reassessment and adjustment may be needed. – Joseph Orseno, Tiltify

13. Consider Entities That Overcome Inflation

Retirement can last more than 30 years. At historical rates of inflation, everything you buy today will cost 2.7 times more in 30 years. To maintain purchasing power, you need to invest in an asset that can overcome this level of inflation. The stocks of well-run, dividend-growing companies have historically outperformed inflation by 2% to 4% annually. – Erik Christman, Oxford Financial Partners

14. Don’t Make Any Drastic Decisions

To avoid catastrophic risks, be careful not to make too many drastic changes based on current inflation or changing market conditions. Our experience has taught us that unforeseen events can happen and do happen, so stay diversified and rebalance as needed. – DeLynn Zell, Bridgeworth Wealth Management