What it is
An inflation hedge is an investment that tends to retain or increase its value in real terms (after accounting for inflation) when the general price level of goods and services is rising. The goal is to prevent the erosion of an investor's purchasing power. Common inflation hedges include real estate, commodities like gold or oil, Treasury Inflation-Protected Securities (TIPS), and sometimes certain equities with strong pricing power.
Investors actively seek inflation hedges during periods of high or anticipated inflation, often driven by central bank policies or supply chain disruptions. For example, gold prices frequently rise when inflation fears escalate, as it's considered a store of value. Real estate, with its tangible nature and potential for rental income growth, can also perform well. Understanding these assets helps investors protect their portfolios from economic pressures.
Why it matters
Inflation erodes the value of your money over time. Investing in inflation hedges helps preserve your purchasing power and protect your portfolio from rising costs.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice