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21 Ways to Combat Inflation and End Up with a Larger Bank Balance

Are rising costs making you nervous? As inflation rises, you’ll need new strategies to shield your finances from its effects, like diversifying your investments and focusing on high-interest savings accounts. Read on to learn how to inflation-proof your assets.

Diversify Your Investments

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Avoid putting all your financial eggs in one basket. Diversification can help mitigate the risks associated with inflation. Consider spreading your investments across stocks, bonds, real estate, and commodities. Each of these asset classes reacts differently to inflation, providing a cushion against potential losses.

Invest in Stocks

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Stocks are a powerful tool against inflation. Companies can increase prices in response to inflation, which can lead to higher profits and stock prices. Focus on industries that are likely to weather inflation well. Investing in stocks involves risks, including the loss of principal.

Consider Treasury Inflation-Protected Securities (TIPS)

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TIPS are government bonds specifically designed to fight inflation. As inflation rises, so does the value of these bonds. They offer a safe way to protect your money against inflation. However, be aware of their lower yield compared to other investments.

Real Estate Investments

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Real estate can be a strong hedge against inflation. Property values and rents typically increase with inflation. Consider investing in rental properties or real estate investment trusts (REITs). Real estate requires management and isn’t as liquid as stocks or bonds.

Focus on High-Interest Savings Accounts

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Choose savings accounts with higher interest rates. While they won’t outpace high inflation, they can offer better returns than regular accounts. Look for accounts with the best rates and low fees. The accessibility and safety of your funds are also important.

Invest in Commodities

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Commodities like gold, silver, and oil often do well during inflationary times. They are seen as a store of value when currency loses its purchasing power. Diversify your portfolio with a mix of these commodities. Be cautious, as commodities can be volatile.

Increase Your Income

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Look for ways to boost your income. Whether it’s asking for a raise, changing jobs, or starting a side hustle, more income can help you keep pace with inflation. More money means more ability to invest and save. Always weigh the time investment against the potential financial return.

Cut Unnecessary Expenses

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Review your spending habits and subscriptions. Identify and cut out non-essential expenses. This practice frees up more money to save and invest. Be disciplined but realistic about what you can live without.

Invest in Yourself

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Education and skill development can lead to higher-paying jobs. As your earnings increase, you can better combat the effects of inflation. Consider online courses, certifications, or attending workshops. Investing in yourself can provide the best return on investment.

Debt Management

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Pay off high-interest debt. Inflation can increase the cost of borrowing. Focus on paying down debts with the highest interest rates first. Be strategic about new borrowing, avoiding high-interest loans.

Retirement Planning

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Adjust your retirement savings plan. Ensure that your retirement portfolio is diversified and adjusted for inflation risks. Periodically review and rebalance your investments. Consider consulting with a financial advisor for personalized advice.

Shop Smartly

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Be a savvy consumer. Look for discounts, use coupons, and buy in bulk when it makes sense. Shopping smartly can help your money go further. Always compare prices and quality before making purchases.

Josh Dudick

Josh is a financial expert with over 15 years of experience on Wall Street as a senior market strategist and trader. His career has spanned from working on the New York Stock Exchange floor to investment management and portfolio trading at Citibank, Chicago Trading Company, and Flow Traders.

Josh graduated from Cornell University with a degree from the Dyson School of Applied Economics & Management at the SC Johnson College of Business. He has held multiple professional licenses during his career, including FINRA Series 3, 7, 24, 55, Nasdaq OMX, Xetra & Eurex (German), and SIX (Swiss) trading licenses. Josh served as a senior trader and strategist, business partner, and head of futures in his former roles on Wall Street.

Josh's work and authoritative advice have appeared in major publications like Nasdaq, Forbes, The Sun, Yahoo! Finance, CBS News, Fortune, The Street, MSN Money, and Go Banking Rates. Josh currently holds areas of expertise in investing, wealth management, capital markets, taxes, real estate, cryptocurrencies, and personal finance.

Josh currently runs a wealth management business and investment firm. Additionally, he is the founder and CEO of Top Dollar, where he teaches others how to build 6-figure passive income with smart money strategies that he uses professionally.