Your money is losing value every day. Here’s why that should worry you.
Inflation hit 2.9% by the end of 2024. That means your $10,000 in savings is really worth $9,710 in buying power. Next year? It gets worse.
Most people stuff cash in savings accounts earning 0.5%. Meanwhile, everything costs more. Gas, food, rent – it all goes up. Your money stays flat.
But smart investors fight back. They put money in assets that grow faster than inflation. Some investments actually do better when prices rise.
This guide shows you 9 investments ranked by how well they protect against inflation. We used real data from 2024 and 2025. No guessing. No hype. Just facts.
You’ll learn which investments work best for your situation. Some are safe and simple. Others take more risks but pay more. All beat leaving cash in a savings account.
1: Commodities
Commodities crush inflation better than any other investment.
Here’s the proof. Goldman Sachs Research found that a 1% surprise jump in inflation led to a 7% real return gain for commodities. The same inflation shock made stocks fall 3% and bonds drop 4%.
Think about it. When gas prices go up, oil companies make more money. When food costs more, wheat farmers get richer. You own the stuff that’s getting expensive.
The Bloomberg Commodity Index jumped 4.7% in just the first three weeks of 2025. That’s after being flat for all of 2024.
What commodities work best for inflation?
Energy leads the pack. Oil, natural gas, and gasoline often spike first when inflation heats up. Energy generated the strongest real returns when inflation surprised higher, Goldman Sachs found.
Industrial metals come next. Copper, aluminum, and steel get more expensive as the economy grows and prices rise. These metals go into cars, buildings, and machines.
Agriculture rounds out the top three. Wheat, corn, and soybeans feed the world. When food prices jump, these commodities soar.
How to invest in commodities
Don’t buy actual barrels of oil. That’s messy and expensive. Buy commodity ETFs instead.
Popular options include:
- SPDR Gold Shares (GLD) for precious metals
- United States Oil Fund (USO) for energy
- Invesco DB Commodity Index Tracking Fund (DBC) for broad exposure
The downside
Commodities swing wildly. They can lose 20% in months. They don’t pay dividends. And they can stay flat for years between inflation scares.
But when inflation hits hard, nothing beats them.
Best for: Aggressive investors who want maximum inflation protection and can handle big swings in value.
2: Real Estate Investment Trusts (REITs)
REITs let you own real estate without buying buildings. And they love inflation.
Here’s why. When costs go up, landlords raise rents. Higher rents mean more cash flow. More cash flow pushes up REIT prices and dividends.
REITs gained 3-5% in 2024 overall. But the best sectors crushed it. Specialty REITs jumped 10-15%. Data centers gained 20-25%. Healthcare REITs rose 4-5%.
Why REITs work against inflation
Real estate prices and rents typically rise with inflation. REITs own thousands of properties. They collect rent from tenants who have to pay more as their costs go up.
Most REITs also have built-in rent increases. Leases often include annual bumps of 2-3%. Some tie increases directly with inflation.
REITs paid dividend yields of 3.96% as of December 2024. That’s way better than the 1.22% you get from stocks in the S&P 500.
Best REIT sectors for inflation
Data centers win big. Companies need more computer power as the economy grows. These REITs charge premium rents and sign long-term leases.
Healthcare REITs stay steady. People always need medical care, inflation or not. Hospitals and medical buildings provide stable cash flow.
Industrial REITs benefit from online shopping. Warehouses and distribution centers see rising demand and rents. Avoid office REITs. Work-from-home killed demand.
How to buy REITs
You can buy individual REITs like stocks. Or buy REIT ETFs for instant diversification.
Try these REIT funds:
- Vanguard Real Estate ETF (VNQ)
- iShares Core REIT ETF (REET)
- Schwab US REIT ETF (SCHH)
Best for: Income investors who want growing dividends and real estate exposure without managing properties.
3: Series I Savings Bonds
I Bonds give you guaranteed inflation protection. The government promises your money will keep up with rising prices.
I Bonds issued from May through October 2025 pay 3.98%. That rate has two parts. A fixed 1.10% that never changes. Plus an inflation part of 2.86% that adjusts every six months.
When inflation goes up, your I Bond rate goes up. When inflation falls, the rate drops. But you never lose money.
How I Bonds beat inflation
The government measures inflation every month. Then it adjusts I Bond rates twice a year based on actual price changes.
The inflation rate reset to 2.86% in May 2025 based on consumer price data from October 2024 through March 2025.
Your bond’s value grows every month. Interest compounds. You earn interest on your interest.
The catch with I Bonds
You can only buy $10,000 per year per person. That’s it. Married couples can buy $20,000 total.
You must hold them for at least one year. No exceptions. Cash out before five years, and you lose the last three months of interest.
But there’s no risk of losing your initial money. I Bonds are backed by the US government.
Where to buy I Bonds
Only at TreasuryDirect.gov. You can’t buy them anywhere else. Set up an account. Link your bank. Buy bonds electronically.
You can also use your tax refund to buy up to $5,000 in paper I Bonds. But electronic bonds work better.
Best for: Conservative savers who want guaranteed inflation protection and don’t need access to their money for at least a year.
4: Treasury Inflation
TIPS work like I Bonds but with key differences. They’re bonds issued by the US Treasury that adjust for inflation automatically.
TIPS funds gained 3.4% in early 2025, beating the 2.7% return of regular bond funds.
How TIPS protect against inflation
The government adjusts the bond’s principal value based on inflation. If inflation is 3%, your $1,000 TIPS becomes worth $1,030. You get interest payments on the higher amount.
When TIPS mature, you get back either the inflation-adjusted amount or your original investment – whichever is higher. You can’t lose your initial money.
TIPS vs I Bonds
TIPS have no purchase limits. Buy as many as you want. I Bonds cap you at $10,000 per year.
You can sell TIPS anytime on the open market. I Bonds must be held for at least one year.
But TIPS prices bounce around before maturity. Buy a TIPS at $1,000, and it might trade for $950 next month if interest rates change. I Bonds always go up in value.
Current TIPS performance
The five-year breakeven inflation rate jumped to 2.66% in February 2025. That means the market expects 2.66% annual inflation for the next five years.
TIPS benefit from falling interest rates, too. Falling yields help longer-term bonds more, as they are more sensitive to rate moves.
Best TIPS options
Individual TIPS work if you plan to hold until maturity. Buy directly from TreasuryDirect.gov at auctions.
TIPS mutual funds offer professional management and diversification. Top choices:
- Vanguard Short-Term Inflation-Protected Securities ETF (VTIP)
- Vanguard Inflation-Protected Securities Fund (VIPIX)
- Schwab US TIPS ETF (SCHP)
Best for: Conservative investors who want inflation protection with no purchase limits and the ability to sell anytime.
5: Gold and Precious Metals
Gold has a mixed record against inflation. Sometimes it works great. Other times it disappoints.
But 2024 was a great year. According to goldprice.org, Gold prices climbed from $1,984 per ounce in October 2023 to more than $2,721 by October 2024. That’s a 40% jump in one year.
When gold works against inflation
Gold crushes it during severe inflation periods. It soared in the 1970s when inflation hit double digits. Gold excelled during the early and late 1970s inflationary periods, when surging oil prices and expanding money supply pushed inflation to historically high levels.
Gold also benefits when people lose faith in the dollar. Central banks may be buying gold as they wait to see the Trump administration’s policies before determining currency reserve plans.
When gold fails as an inflation hedge
During the most recent inflationary spike from mid-2021 through March 2023, gold prices rose but lagged the broader commodity index by about 13 percentage points.
Gold fell behind in the late 1980s, too. When consumer prices rose about 20% from February 1987 through November 1990, gold underperformed.
The problem? Gold doesn’t produce anything. It just sits there. Companies can raise prices and earn more during inflation. Gold can’t.
How to invest in gold
Don’t buy gold coins or bars unless you enjoy paying storage and insurance costs. Buy gold ETFs instead.
Popular options:
- SPDR Gold Shares (GLD)
- iShares Gold Trust (IAU)
- Aberdeen Standard Physical Gold Shares ETF (SGOL)
Mining stocks offer more upside but add company risk. Try VanEck Gold Miners ETF (GDX) for diversified exposure.
Best for: Portfolio diversification and protection against currency debasement. Don’t expect gold to always beat inflation.
6: International Stocks
US stocks get all the attention. But foreign stocks can better protect against inflation.
Here’s why. Higher inflation could lead to a weakening dollar as inflation erodes the currency’s value. A weakening dollar would benefit investors in non-US stocks through currency translation when converting returns back to dollars.
How international stocks fight inflation
Different countries face inflation at different times. When US inflation spikes, other economies might stay stable. You spread your risk across multiple currencies and economies.
North America posted the strongest regional returns year-to-date with 7-8% returns, but Europe and Asia offer different opportunities.
Many foreign companies operate in commodities or sectors that benefit from inflation. Think oil companies in Norway or mining firms in Australia.
Emerging markets offer commodity exposure
Countries like Brazil, Russia, and South Africa export lots of raw materials. When commodity prices rise with inflation, these economies often benefit.
But emerging markets swing more than developed countries. You take extra risk for extra return potential.
How to buy international stocks
International mutual funds and ETFs make it easy. No need to research foreign companies or deal with currency exchange.
Developed market options:
- Vanguard Developed Markets ETF (VEA)
- iShares MSCI EAFE ETF (EFA)
- Schwab International Equity ETF (SCHF)
Emerging market choices:
- Vanguard Emerging Markets ETF (VWO)
- iShares MSCI Emerging Markets ETF (EEM)
Best for: Diversification-focused investors who want exposure to different economies and currencies over long time periods.
7: High-Dividend Stocks in Essential Sectors
Not all stocks suffer during inflation. Companies that sell must-have products can raise prices and keep profits growing.
Energy, equity REITs, and financials are some of the equity sectors that could benefit in an inflationary environment.
What makes a stock inflation-resistant
The key is pricing power. Companies that provide essential services can pass higher costs to customers.
Utilities fit the bill. Everyone needs electricity and water. Utility companies often get rate increases approved by regulators to cover higher costs.
Consumer staples work too. People buy food, soap, and toilet paper no matter what. Companies like Procter & Gamble and Coca-Cola have raised prices for decades.
Healthcare stays stable. Medical care isn’t optional. Drug companies and hospitals can often charge more during inflation.
Dividend growth matters
The best inflation-fighting stocks don’t just pay dividends. They increase them regularly. Over the medium-long term, overall REIT earnings growth will be around 5% and dividends will grow at a similar or slightly higher rate.
Look for companies with 10+ year dividend growth streaks. They’ve proven they can raise payouts through different economic cycles.
Examples of inflation-resistant dividend stocks
Berkshire Hathaway keeps huge cash reserves. The cash gives it plenty of ammunition to acquire competitors or buy stocks at discounted prices during tough times.
Realty Income pays monthly dividends and has increased them for over 30 years. Realty Income has paid a monthly dividend without a break 653 times – that’s over 54 years.
How to find dividend growth stocks
Look for companies with:
- 10+ years of dividend increases
- Payout ratios under 60% of earnings
- Growing sales and profits
- Essential products or services
Dividend ETFs make it easier:
- Vanguard Dividend Appreciation ETF (VIG)
- iShares Core Dividend Growth ETF (DGRO)
- Schwab US Dividend Equity ETF (SCHD)
Best for: Income investors who want growing dividend payments from companies with pricing power.
8: Short-Term Inflation-Protected Bond Funds
You get TIPS protection with professional management. Fund managers handle the complicated stuff while you collect returns.
The average year-to-date return for short-term inflation-protected bond funds hit 2.3% compared with just 1.4% for regular short-term bond funds.
Why use TIPS funds instead of individual bonds
Professional managers know which TIPS to buy and when. They handle maturity ladders and reinvestment for you.
You get instant diversification across many different TIPS with various maturity dates. Individual TIPS concentrate risk in one bond.
Funds offer liquidity. Buy and sell shares anytime the market is open. Individual TIPS might be harder to trade.
Short-term vs long-term TIPS funds
Short-term funds hold TIPS maturing in 1-5 years. They swing less in price but offer lower returns.
Long-term funds own TIPS maturing in 10-30 years. They move more but can generate bigger profits when rates fall.
Longer-term funds have benefited more from falling yields as they’re more sensitive to rate moves.
Best TIPS funds
The largest TIPS fund, the $55 billion Vanguard Short-Term Inflation-Protected Securities Index Fund (VTIP), returned 2.2% in 2025 after gaining 6.6% in 2024.
The second-largest, the $26 billion Vanguard Inflation-Protected Securities Fund (VIPIX), returned 3.4% year-to-date.
Other solid choices:
- Schwab US TIPS ETF (SCHP)
- iShares TIPS Bond ETF (ITOT)
Watch the expenses
Fund fees eat into returns. Stick with low-cost index funds from Vanguard, Schwab, and Fidelity. Avoid funds charging over 0.50% annually.
Best for: Conservative investors who want TIPS inflation protection with professional management and easy liquidity.
9: Floating Rate Loans
These loans reset their interest rates regularly. When rates rise with inflation, you earn more.
Most floating rate loans tie to short-term rates like the federal funds rate or LIBOR. As these benchmarks climb, loan payments increase every few months.
How floating rate loans work
Banks make loans to companies at rates that adjust quarterly or semi-annually. Instead of locking in 5% for 10 years, they might charge the fed rate plus 3%.
If the fed rate is 2%, you earn 5%. If it jumps to 4%, you now earn 7%. Your income rises with inflation.
The loans typically go to companies that can’t get regular bank financing. That means higher risk but higher potential returns.
Benefits during inflation
Traditional bonds get crushed when rates rise. A 10-year bond paying 3% becomes worthless when new bonds pay 6%.
Floating-rate loans protect against this. As rates climb, your payments climb too. You’re not stuck with yesterday’s low rates.
The risks are real
These companies borrow at floating rates because banks won’t give them fixed-rate loans. Default risk is higher than government bonds or blue-chip corporate bonds.
During recessions, some companies can’t make payments. You might lose money on individual loans.
Economic downturns hit floating-rate loans hard. They fell 20% during the 2008 financial crisis.
How to invest in floating-rate loans
Don’t try to buy individual loans. Use mutual funds or ETFs that own hundreds of different loans.
Popular floating rate funds:
- Invesco Senior Loan ETF (BKLN)
- SPDR Blackstone Senior Loan ETF (SRLN)
- iShares Floating Rate Bond ETF (FLOT)
Best for: Sophisticated investors who understand credit risk and want protection against rising rates.