6. The Real Return You Need Against Inflation
Your goal as a saver:
“My returns must beat inflation.”
A standard bank account earning 0.5% annually while inflation runs at 2.5–3% is a loser. You are losing 2–2.5% of real value each year.
7. How to Protect Your Portfolio—and Your Future
Here is your toolkit to outrun inflation:
i. Treasury Inflation‑Protected Securities (TIPS)
Government bonds that rise with CPI. They shield your principal and offer inflation-plus yields. Ideal for preserving real value.
ii. I Bonds
U.S. savings bonds combining a fixed rate with a semiannual inflation adjustment—next floor on cost-of-living protection.
iii. Dividend-Paying Stocks & Index Funds
Historically, equities have beaten inflation over long periods. Focus on broad, well-diversified funds that offer dividends and growth.
iv. Real Estate (REITs or Physical Property)
Often keep pace with price declines. Real estate is less volatile but less liquid—consider it part of a balanced portfolio.
v. Commodities & Gold
Tend to shine during inflation spikes. Smaller allocations can reduce risk.
vi. High-Yield Savings or Money Market Accounts
While rates have improved since 2022, many still lag behind inflation. Useful for liquidity, less for long-term growth.
vii. Periodic Rebalancing
Markets shift. Check your asset mix annually and rebalance to stay on track with your goals and risk tolerance.
viii. Stay On Top of Policy & Data
Know when inflation shifts. CPI and PCE reports, Fed rate decisions—all matter for your strategy.
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