How To Build an Inflation-Resistant Portfolio: 5 Asset Classes That Protect Your Wealth

When inflation climbs above the Federal Reserve’s 2% target—currently sitting at 2.8% according to recent U.S. Bureau of Labor Statistics data—your investment returns begin to erode silently. A seemingly attractive 5% gain evaporates to just 2% after inflation takes its share. For savvy investors seeking inflation stocks and broader portfolio protection, understanding which assets weather economic headwinds becomes critical.

The good news? Not all investments suffer equally under inflationary pressure. Strategic allocation to inflation-resistant assets can preserve and even grow your purchasing power. Let’s explore five proven investment vehicles that maintain their value when prices rise across the economy.

Commodities: The Raw Materials That Rise With Inflation

Hard assets like crude oil, precious metals, and industrial materials move in lockstep with inflation, as their production costs and market demand both increase. Gold represents the quintessential inflation hedge, protecting against currency depreciation when paper money loses value.

Recent market action demonstrates this principle. Gold prices have climbed to record levels, touching $3,041.37 per ounce, driven by geopolitical concerns and trade uncertainty. The Harbor Commodity All-Weather Strategy ETF (HGER), which tracks crude oil and similar commodities, has demonstrated more stable performance relative to the S&P 500 since launching in 2022.

The tradeoff: Commodity markets experience significant volatility, with prices swinging based on supply disruptions and demand shifts. These assets perform best as portfolio components rather than standalone positions.

Dividend-Paying Inflation Stocks: Steady Income Through Economic Shifts

Companies with strong dividend histories—particularly in utilities, consumer staples, and healthcare—provide reliable income streams regardless of market conditions. These inflation stocks tend to raise payouts alongside price increases, creating a natural hedge.

Duke Energy exemplifies this strength. The utility reported earnings of $5.90 per share last year, with management projecting growth to $6.32 this year and $6.72 by 2026. Its 3.5% dividend yield exceeds the S&P 500 average, rewarding patient investors. The sector’s predictability makes dividend stocks valuable portfolio anchors, though they work best combined with other inflation hedges rather than as standalone solutions.

Treasury Inflation-Protected Securities: Government-Backed Price Stability

TIPS adjust their principal based on the Consumer Price Index, ensuring your purchasing power remains protected against erosion. Unlike conventional bonds, these government securities pay interest semiannually and provide consistent income.

The Vanguard Inflation-Protected Securities Fund (VIPIX) delivered 3.4% year-to-date returns through 2025, benefiting from rising inflation expectations tied to tariff concerns and economic slowdown fears. This performance reflects increased institutional demand for inflation-protected assets.

However, TIPS track general CPI—they may not fully shield you if specific expenses like healthcare, housing, or education are rising faster than the broader index.

Real Estate Investment Trusts: Property Exposure Without Physical Ownership

REITs enable exposure to commercial real estate, residential apartments, and retail centers without direct property ownership. The sector’s fundamental advantage: landlords increase rents alongside inflation, maintaining strong returns.

From 2021 through 2024, national rental prices climbed an average of 7% annually according to Zillow data—outpacing core inflation rates. Most REITs distribute substantial profits as dividends, creating dual income streams for portfolio diversification. This combination makes REITs particularly attractive during inflationary periods.

Direct Rental Property Ownership: Leveraging Fixed-Rate Debt

Owning rental property offers tangible inflation protection. Property values typically appreciate over time, and rents can be adjusted upward. A fixed-rate mortgage becomes increasingly advantageous—your principal payment remains constant while rental income rises with inflation.

The complexity: Real estate requires active management, involving maintenance costs, vacancy periods, and tenant management. It’s best viewed as a medium-to-long-term commitment rather than passive wealth-building.

Creating Your Inflation-Protected Investment Strategy

Inflation erodes wealth, but diversified asset allocation counters this risk effectively. By combining TIPS, dividend stocks, REITs, commodities, and real estate—each responding differently to economic cycles—you create a portfolio resilient against purchasing power decline. No single asset class provides perfect protection; instead, strategic diversification ensures your investments maintain strength regardless of inflation’s trajectory.