How Can You Protect Your Portfolio Against Inflation?

June 14, 2021
As investors eye rising prices, are there ways to manage a portfolio that can offset some of the effects of inflation?

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After You Listen

  • If you'd like to learn more about investments that could help you protect against inflation, including our ETF and mutual fund Select lists, check out Schwab.com/Research.
  • Follow Mark Riepe and Kathy Jones on Twitter: @MarkRiepe and @KathyJones.
  • If you'd like to learn more about investments that could help you protect against inflation, including our ETF and mutual fund Select lists, check out Schwab.com/Research.
  • Follow Mark Riepe and Kathy Jones on Twitter: @MarkRiepe and @KathyJones.

Since the financial crisis of 2008, the Federal Reserve has engaged in a great experiment: They are testing whether massive amounts of new money can heal the damage from macroeconomic catastrophes, such as the financial crisis and the COVID-19 pandemic. For years, investors have asked persistent questions about the likelihood of high inflation and how to help protect a portfolio against it.

In this episode, Mark speaks with Kathy Jones, Schwab's chief fixed income strategist. They discuss the history of inflation in the U.S. economy—including the gold standard and the key players at the Federal Reserve—as well as hyperinflation and recent fears of rising prices.

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Important Disclosures

Investors should consider carefully information contained in the prospectus or, if available, the summary prospectus, including investment objectives, risks, charges, and expenses. Please read it carefully before investing.

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. 

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Supporting documentation for any claims or statistical information is available upon request.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

Investing involves risk including loss of principal.

Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance.

Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications and other factors. Lower rated securities are subject to greater credit risk, default risk, and liquidity risk.

Treasury Inflation Protected Securities (TIPS) are inflation-linked securities issued by the US Government whose principal value is adjusted periodically in accordance with the rise and fall in the inflation rate. Thus, the dividend amount payable is also impacted by variations in the inflation rate, as it is based upon the principal value of the bond. It may fluctuate up or down. Repayment at maturity is guaranteed by the US Government and may be adjusted for inflation to become the greater of the original face amount at issuance or that face amount plus an adjustment for inflation.

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