How to Beat Inflation

Setting money on fire to stay warm
Photo by Jp Valery on Unsplash

You’ve probably been hearing a lot about inflation lately, and for good reason. It’s gotten really bad lately. That means your money is worth less, and that there are some serious issues with the economy that are going make it harder for future you to build wealth.

In this article, we’ll take a quick look at what’s going on right now and what you can do to hedge your bets. Hopefully, together we can come out of this whole thing stronger and not end up with Zimbabwe money in our accounts.

What is inflation?

At its core, inflation is very simple. When the price of goods increases without the value of the goods increasing, that’s inflation. It can be very specific. For instance, if the price of pizza in your area has risen 10%, the cost of pizza has inflated. 

Usually, when people talk about inflation, though, they use it in a very broad sense to mean that overall buying power is down. So it’s not just the price of pizza that has risen; it’s the price of generally everything. 

In a good year, the price of goods may increase one to two percent. So that one dollar donut you love so much might cost one dollar plus a penny next year. 

However, we are seeing record inflation levels right now. They are currently estimated to be 7.5%, and that’s probably a low-ball estimate. 

This sucks, especially since it can be hard to realize how much inflation hurts your value. 

How Inflation Deceives You

Since most people don’t track how much things cost in their day-to-day lives, it doesn’t feel like you are losing as much as you are. You may complain about the price of gas, but without looking at the total cost of all things, you might still feel like your investments are doing pretty well. 

The problem is that at nearly 8%, you might even be losing money on traditionally safe investments. An investment account yielding a very reasonably 6% return isn’t keeping pace with inflation, and you are still losing 2% of your value. 

It’s far worse if you aren’t invested. Your job may try to make you feel good by giving you a 5% raise, but at the end of the year, you’ll actually be poorer. If you don’t get a raise, you may find yourself struggling to pay bills because the price of survival has climbed too high. 

Inflation can make you feel like your on a sinking ship
Photo by Jason Blackeye on Unsplash

What Caused This High Inflation?

Which all begs the question, who or what do we blame for the inflation? 

Unfortunately, it’s not a simple question to answer. A lot of people will point at their favorite boogeyman, whether it be political or otherwise, but the truth is that the economy is incredibly complex, and there is no single point of failure. 

In general, though, today’s record inflation is a product of a few key things. 

The first is that we are in the middle of massive supply issues. Many factories and supply lines prepared to slow down during the pandemic, but demand for goods didn’t decrease. It increased drastically. Anytime you have a supply that can’t meet demand, you have price increases.

The semi-conductor shortage is the most noticeable problem. Computers are in pretty much everything, so a lack of computers causes a lack of pretty much everything. Add in a few major logistics issues, a general lack of manpower to move goods, and a world still in recovery, and you have a recipe for disaster. 

Second, even companies that were not affected by the supply shortages seized the opportunity to raise prices. Gas and other energy suppliers in particular simply raised their rates. They saw a chance to make more money given that the general price of goods was rising. 

The good people over at Forbes have a much more in-depth analysis if you are interested. 

Combined, those two things mean that companies can and will charge whatever they want. We don’t have the supply to offset demand, nor do we have any safeguards against price jacking.

Can Inflation Be Stopped?

The short answer is no. Some inflation is good; it’s an indicator of a healthy economy. It can and should be lowered, though. 

To do that, we simply need to address the biggest issue. There is not enough supply to meet demand. In this context, the word “simply” is doing more lifting than Atlas. We have badly managed ports that can’t get products out fast enough, monopolies that don’t want prices to go down, and companies that are trying their hardest to make products and still not producing fast enough. 

The government will try everything it can to lower inflation. That’s the job of the Federal Reserve, which will probably raise interest rates to discourage spending. 

It’s very likely the only thing we can do is wait, which is why you need to protect yourself from the effects of run-away inflation. 

Gold bars are excellent at holding value
Photo by Jingming Pan on Unsplash

How to Protect Yourself

The simplest way to protect yourself is to make sure your value outpaces the rate of inflation. That’s a lot easier said than done – especially when inflation is so crazy. 

There are two things you can focus on, though. 

Cut Spending

The first is to simply spend less on things you don’t need. There are two main benefits to that.

First, the price of things you do need is going up. You’ll need the money you save by not buying the things you don’t need in order to make sure you have the things you do need. 

The second is that you’ll be able to invest that money into things that won’t devalue themselves as much as physical objects will. As for what to invest in, the name of the game is to be diversified. 


There is no guaranteed hedge against inflation. What you want to do is make sure that you have your wealth spread out enough that even if one investment fails, you aren’t screwed since the others will likely be ok. 

Some investments are better than others at avoiding the effects of high inflation, though. 

The Best Investments During High Inflation Periods

And yes, they are exactly what you would expect. Generally, the best investments during times of economic prosperity are also the safest when the proverbial crap hits the fan. 

Real Estate

A home is an absolutely excellent guard against inflation since it will grow in value along with the price of goods. Even if you buy a house and it only grows at the pace of inflation, you’ll be a lot better off than if you had just kept cash laying around. 

Inflation can even work in your favor when buying a home. If you get a mortgage today, it’ll be at the value of today’s money. In 20 years, the value of money may be far lower, meaning you are paying less but still getting the same house. 


Investing in gold feels very antiquated in today’s world, but there’s a reason it’s been around forever. The price of gold almost always keeps up with inflation, meaning that holding onto a couple of gold bars will make sure that you aren’t losing value. 

The good news is that even though the idea is old, there are plenty of modern practices. This article could get you started, but in addition to buying physical gold, you could invest in mining, gold and silver ETFs, and jewelry companies. 


We have our own write-up on crypto right here, but suffice to say that plenty of people believe in it and believe that it will protect against inflation. The idea is the same as the idea behind gold; by having something that represents value but isn’t tied to currency, the value will at least keep pace with inflation.

Investors like Mark Trilby and Stephan Graham both have a lot of faith in crypto as a long-term investment. You should do your own research before jumping into it, though. That’s true for all investments; it’s just especially true with crypto. 


Finally, one of the best things you can do is invest in yourself. That can mean a lot of things, and we are not here to tell you which meaning is best. 

Simply put, if you are worth more due to a new skill, certification, or mental state, then your value will remain high despite inflation. That can come through in the form of a big raise, new opportunities to grow your current wealth, or by learning skills that offset your spending and give you more money to work with. 

However, there’s one thing to keep in mind above all else. 

The Best Thing to Do

Don’t Panic. It’s pretty much perfect advice at all times. Don’t let worrying about inflation stop you from taking care of the basics. Your current investment strategy is probably fine, and as long as you aren’t spending needlessly on whatever you can get your hands on, you’ll survive. 

The truth is that the stock market has always outpaced inflation. If you just invest in the S&P 500 today, or whatever your favorite market is, you will be ok. If you just buy a home to live in and keep it up, like you were planning on doing anyway, you’ll be ok. Take a deep breath, and hope that we start getting a ton of microchips sooner rather than later. 

Brad Danger
Mr. Danger loves cars, finance and living the Ideal Lifestyle!
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