By
Prasanna Kumar, Founder and CEO of FinloTax.getty
Inflation rates have witnessed a steep fall since the Covid-19 pandemic hit, dropping from the highs of 9.1% in 2022 to 2.8% in February 2025. Although the annual inflation rate in February decreased slightly from the 3% reported in January 2025, the Federal Reserve’s target rate of 2% has been unattainable thus far. More importantly, the widespread imposition of tariffs and the consequent price rise are likely to drive inflation figures higher in the months ahead.
Inflation is an inevitable economic reality that erodes your purchasing power over time. Proactive strategic investing is a hedge you can use to combat high inflation.
Investment Strategies To Tackle Inflation
1. Diversify across asset classes.
One of the best ways to tackle rising inflation is to diversify your portfolio of investments. A well-diversified portfolio reduces risk exposure by spreading it across various asset classes and enhancing your resilience. Include a mix of stocks, bonds, real estate and commodities to spread exposure.
2. Invest in government bonds.
Treasury inflation-protected securities (TIPS) are government bonds meant to keep pace with inflation. They help protect your investment by increasing as inflation rises and decreasing once deflation sets in. This is done by adjusting the principal value of these securities based on changes in the consumer price index (CPI).
3. Invest in commodities and precious metals.
Putting your money into commodities and precious metals can be a safe bet during periods of rising inflation. While the currency value falls, the prices of gold, silver and other precious metals tend to rise. Commodities such as oil and grain can also be profitable investments during inflationary times. Take advantage of equity-traded funds or mutual funds for your commodities and precious metal investments.
4. Invest in real estate.
Along with commodities like gold and oil, real estate often performs well during inflationary periods. Besides, real estate investments tend to appreciate over time while also ensuring you have a steady rental income stream.
5. Invest in real estate investment trusts (REITs)
Real estate investment trusts (REITs) are set up by companies that own and operate major real estate holdings. Inflation impacts real estate by increasing rent and property prices. REITs take advantage of inflation to generate profits …
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