Broker Check
Investment Strategies for High Inflation and Interest Rates

Investment Strategies for High Inflation and Interest Rates

| July 08, 2023
High inflation has caused plenty of repercussions, such as higher interest rates and the rising cost of living. For investors, high inflation has also created new obstacles to wealth building. Fortunately, there are several investment options that can withstand the highs and lows of inflation. Learn more about these options before you speak with a financial consultant.

Investment Strategies for High Inflation and Interest Rates

Inflation causes price increases across the board, and when it comes to investing wealth, this can have a dramatic impact on how quickly you can grow your portfolio. After all, the more inflation increases, the more obvious the effect of a high-interest rate on certain assets will be. The stock market is particularly vulnerable to high-interest rates, which can slow earnings. 
In general, it's best to opt for long-term assets when you want to diversify your portfolio during inflation. Short-term assets simply won't have the same payoff because the high-interest rate will undercut any gains. Some of the best long-term asset options investors have during an inflammatory period include:

Real Estate

Real estate is one of the best assets investors can acquire since, regardless of the state of the economy, real estate will always produce a valuable income. During times of inflation, real estate holdings can increase in value, which can make it easier to withstand other rising costs if you own multiple properties or if you want to earn passive income. Commercial real estate for businesses or apartment complexes tend to be the sturdiest properties during inflation.

Silver and Gold

Physical assets such as silver and gold can also be good long-term assets to have in your portfolio. During inflation, the value of precious metals tends to drop, which makes it easy to buy a large stock to hold on to until the economy stabilizes. When the economy deflates and the value of silver and gold increases, you can sell these assets for a profit.
Some experts suggest investing in silver over gold since silver has better historical performance during inflation. On the other hand, gold is more expensive and can net a tidier profit when it's time to sell. It may be best to invest in both silver and gold ETFs to reduce your risk.


Savings bonds are another good option to consider, especially since some bonds are designed to reflect the pattern of inflation. When bonds reflect the continual changes in interest rates, the asset has more stability that can generate wealth more reliably. Savings bonds from the U.S. Treasury are backed by the government, which makes the asset much safer than options like commodities. 
Bonds can be both short-term and long-term assets. Some bonds have fixed rates and some can earn interest for 30 years. If you're planning for your future retirement during inflation, a bond may be your best bet. 
Building wealth can be challenging at the best of times, but it becomes monumentally more challenging when the economy is in the middle of inflation. However, you can purchase certain assets that can help you plan for your long-term financial success. Get in touch with Jaks Financial to start building your financial plan today.