What are the best investment strategies to beat inflation?

1 Diversify your portfolio

One of the most important principles of investing is diversification, which means spreading your money across different types of assets, such as stocks, bonds, real estate, commodities, and cash. Diversification reduces your exposure to any single market or sector, and helps you balance your returns and risks. By diversifying your portfolio, you can benefit from the growth potential of some assets, while protecting yourself from the volatility or decline of others.

3 Consider real estate

Real estate is another asset class that can help you beat inflation, as it tends to appreciate in value over time, and generate rental income. Real estate can also act as a hedge against inflation, as the value and rent of property usually rise along with the cost of living. However, real estate is also illiquid, meaning that it is not easy to buy or sell quickly, and it requires maintenance and management costs. You can invest in real estate directly, by buying a property, or indirectly, by buying shares of a real estate investment trust (REIT), which is a company that owns and operates a portfolio of properties.

4 Explore commodities

Commodities are raw materials, such as gold, oil, grains, or metals, that are traded on global markets. Commodities can help you beat inflation, as they tend to increase in price when the demand for them exceeds the supply, or when the value of money declines. Commodities can also act as a store of value, especially gold, which is seen as a safe haven in times of uncertainty or crisis. However, commodities are also volatile, as they are influenced by various factors, such as weather, geopolitics, or speculation. You can invest in commodities directly, by buying physical goods or futures contracts, or indirectly, by buying shares of a commodity-related company or fund.

5 Adjust your bond strategy

Bonds are loans that you make to a government or a corporation, and they pay you interest and principal over time. Bonds can provide you with a steady income and lower risk than stocks, but they can also lose value when inflation rises, as the interest rate becomes less attractive. To beat inflation with bonds, you need to adjust your strategy, by choosing shorter-term bonds, which are less sensitive to interest rate changes, or inflation-linked bonds, which adjust their interest and principal payments according to the inflation rate. You can also diversify your bond portfolio by adding some high-yield bonds, which offer higher interest rates but also higher risk.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?