It can be easy to let inflation defeat you and take away the value of assets. It might sound a little strange, but inflation does not have to be a negative occurrence. There are ways to get it to work with you rather than against you. Depending on where you put your money, inflation could actually help you put more money in your bank account.

The first way to protect your assets from inflation is to buy Treasury Inflation-Protected Securities (TIPS). These are government backed bonds that are designed to protect you from inflation and are tied to the Consumer Price Index. This means that they increase with inflation and decrease with deflation. When your TIPS matures, you are paid the adjusted principal or the original principal, whichever is greater. TIPS pay interest twice a year at a fixed rate that is exempt from state and local taxes, but subject to federal taxes. You can hold onto your TIPS until it matures or you can sell it before it matures.

Investing in stocks can be risky, but you just have to look for the right kind of companies. Look for the lowest cost producer. These are businesses like commodity companies or healthcare names that possess the strongest profit margins. Commodity companies can increase prices naturally during inflation, as opposed to companies whose product prices are subject to manufacturer and distributer policy.

Another way you can protect your assets from inflation is by investing in commercial real estate. This is one of the few assets that historically react proportionally to inflation because as inflation occurs, housing values and rents go up. If you are renting a house out to tenants, you will be making more money during times of inflation. Also, during times of higher profits and wages, the higher rent tenants are willing to pay.


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Miramontes Capital is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Miramontes Capital and its representatives are properly licensed or exempt from licensure. This blog is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Miramontes Capital unless a client service agreement is in place.