How to Protect Against Inflation: 3 Portfolio Strategies You Need to Consider

The value of a dollar today won’t match its value in five, 10, or 20 years. This is due to inflation, a natural occurrence in which a currency’s purchasing power declines over time. 

Inflation is an ongoing problem, and it can hinder the performance of your investment portfolio. There is no telling how it will affect a currency’s value, but you can learn how to protect against it. This guide will explain inflation and its causes, and it will help you know how to react as an investor.

Inflation and Its Effect on Your Investment Portfolio

People use inflation to measure the impact of price changes across a set of products and services for a given time frame. It’s predicated on the supply of money available in an economy and can be categorized into three groups: 


This form of inflation occurs when an increase in the supply of money in an economy and the demand for products and services exceeds its production capacity. This causes the demand and prices for these products and services to rise simultaneously, creating a supply-demand gap. The result: Prices are further increased, which can lead to devaluation of the currency. 


This is related to additional supplies of money and credit provided to a commodity or other asset markets. These instances can lead to higher costs for the finished products or services and increased prices for consumers. This means that, even though money is being used to stimulate the growth of asset markets, consumers are paying more, which means their money becomes less valuable. 


This centers around the idea that businesses project inflation to increase continuously. Companies set prices for products and services and expect them to climb, and their workers expect wage increases in affordance with inflation. This can lead businesses to raise the prices of their offerings to offset increasing wage costs, as well as lead to a seemingly endless “wage-price spiral.” 

You may find yourself dealing with any of the above types of inflation, regardless of your investment portfolio. You cannot stop inflation, but diversifying your portfolio offers a great option to combat it.   

Why You Need to Diversify Your Investment Portfolio

Putting all your eggs in one basket may seem like an attractive investment option when you think you’ve found a good angle. Doing so creates significant risk, though: If you make a poor investment, you can lose everything in one fell swoop. 

Diversification guards against inflation that can damage your investment portfolio. It ensures you can minimize the risk of substantial financial losses, since your portfolio’s performance is not tied exclusively to one currency or asset. 

Let’s not forget about the growth opportunities that can become available in a diverse portfolio, either. Holding a single investment can help you capitalize on growth in one area, but maintaining a diverse portfolio can deliver returns across multiple sectors. 

How to Protect Against Inflation and Diversify Your Investment Portfolio

Close up of an investment portfolio

If you want to discover how to protect against inflation and diversify your investment portfolio, help is available. You can partner with an investment management advisor who has your best interests at heart. This advisor can learn about your investment management goals and help you uncover ways to optimize your portfolio’s performance. 

An advisor can develop a personalized investment management strategy. They can also provide insights into any of the following options that can help you simultaneously protect your investments against inflation and diversify your portfolio. 

1. Bonds

Investors sometimes refer to bonds as “fixed income,” since these investments provide a predetermined payout over a set period. You will have less exposure to inflation by choosing short-term bonds over long-term ones. Or you can select high-yield or emerging market bonds that offer protection against future cost-of-living increases.

2. Stocks

You can invest in stocks that have dividends, so you’re assured of making additional money based on what a company earns. This means as a company increases its revenues, your dividend can rise accordingly, and what you earn can help you hedge against inflation. 

3. Real Estate

The U.S. housing market experienced an average rate of inflation of 4.14% annually from 1967 to 2021; comparatively, the overall inflation rate in the U.S. was 3.91% during that time. Average U.S. home prices rose 797% from 1967 to 2021. This reflects how owning a home or rental property can provide a viable investment and an excellent safeguard against inflation. 

Keep in mind that economic markets fluctuate constantly, so maintaining a diverse investment portfolio requires hard work and patience. Those who conduct regular evaluations of their investments can ensure their portfolio is balanced, regardless of how markets perform. 

3 Steps for Rebalancing Your Investment Portfolio When Economic Markets Fluctuate

It can be worrisome to hold investments in fluctuating economic markets. Try not to stress if a market in which you have invested suffers a decline. You can instead use the following steps to rebalance your portfolio. 

1. Evaluate Your Investments

Look at your investments and how you originally wanted your portfolio to be set up. It pays to consult with an investment management advisor, as this professional can help you conduct a thorough review. Your advisor can also help you fine-tune your investment strategy. 

2. Assess the Performance of Your Investments

Find out how your investments have performed to date and consider dropping any that have missed the mark thus far. 

3. Align Your Investments Based on Your Requirements

Finalize your plan to rebalance your portfolio, then buy or sell assets to complete the process. 

Rebalancing your portfolio can be quick and straightforward, especially if you work with an investment management advisor. Your advisor can provide tips and guidance to avoid common portfolio mistakes in addition to helping you protect your investments against inflation. 

How to Avoid Common Mistakes With Portfolios

Even experienced investors are susceptible to mistakes along the way. Common mistakes by people trying to diversify their portfolios and hedge against inflation include:

  • Overdiversification
  • Frequent investment turnover
  • Letting fear or greed drive their investment decisions
  • Lack of patience
  • Trying to time the market

Working with an investment management advisor ensures your portfolio is in good hands. This advisor can help you set up a diverse portfolio and keep you updated regarding its performance. Professional advice can provide some of the best inflation protection there is.

Contact an Expert With Questions About How to Protect Against Inflation

Inflation shouldn’t stop you from getting the most value out of your investments. Expert guidance is available to help you build a portfolio designed to mitigate the impact of inflation. 

Bogart Wealth has independent investment management advisors who can show you how to protect against inflation. Our advisors can craft a custom strategy that aligns with your investing goals. Contact us today to learn more about our investment management services.

Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Bogart Wealth, LLC [“Bogart Wealth”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level (s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Bogart Wealth. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Bogart Wealth is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Bogart Wealth’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at bogartwealth.com

Please Note: Bogart Wealth does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Bogart Wealth’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.
Please Remember: If you are a Bogart Wealth client, please contact Bogart Wealth, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services.  Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently.
Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

latest posts

Stay up to date with our most recent news and updates!

Work with a financial advisor who puts your needs first.

Want to talk first? Call us at
(866) 237-0121

  • This field is for validation purposes and should be left unchanged.

You are now leaving the Bogart Wealth, LLC / Bogart Wealth™ (“Bogart”), website and entering a third party website that we do not control.

Bogart is not responsible for third party websites hyper linked our website, and does not guarantee or necessarily endorse any content, recommendations, products or services offered on third party sites.

In addition, third party websites may have different privacy and security policies than Bogart. Therefore, you should review the applicable privacy and security policies of any third party website before you provide any information.