Best hedges against inflation: 6 ways to protect your purchasing power

May 6, 2026 - 06:55

With inflation eating away at the value of cash, many people are looking for ways to keep their purchasing power from shrinking. While no investment is completely risk-free, certain assets and accounts have historically held up better when prices rise.

One of the simplest hedges is Treasury Inflation-Protected Securities, or TIPS. These government bonds adjust their principal value based on the Consumer Price Index, so your payout rises with inflation. They are not flashy, but they offer a direct link to official inflation numbers.

Real estate is another common choice. Property values and rental income tend to climb during inflationary periods, which can offset the declining value of paper money. Real estate investment trusts, or REITs, allow you to invest in property without buying a house yourself.

Commodities like gold and silver have long been seen as stores of value. While their prices can swing wildly in the short term, they often gain when confidence in paper currency drops. Some investors also turn to energy or agricultural commodities for similar reasons.

Stocks can work as a hedge, but not all of them. Companies with strong pricing power, meaning they can pass higher costs to customers, tend to do better. Think of firms in essential sectors like utilities, healthcare, or consumer staples.

Series I savings bonds from the U.S. Treasury are a low-risk option. Their interest rate is reset every six months based on inflation, so your money keeps up with rising costs. The catch is that you cannot cash them in for the first year.

Finally, holding foreign currencies or international stocks can provide a buffer if the U.S. dollar weakens during inflation. Diversifying beyond the domestic economy spreads the risk.

The key is not to chase one single asset. A mix of these options, tailored to your timeline and tolerance for risk, can help preserve your buying power when prices keep climbing.