10 Investment Strategies for Inflationary Times

Inflation is a natural occurrence in market economies. It’s just that most Americans haven't really experienced it at a meaningful level, unless you're a baby boomer or older. After all, it was 1982 and Ronald Reagan was president the last time it was this high. Gen X was in high school then and millennials were only just about to arrive.

That said, while the market is beaten down and our savings are still paying almost nothing, and everything costs more, this is not the time to give up on a strategy of investing for the long term as a way to build financial security. But it is a good time to look at what you have going, and whether you want to make some adjustments. Here are some inflation strategies to consider.

5 Stocks Under $49
Presented by Motley Fool Stock Advisor
We hear it over and over from investors, "I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of "5 Growth Stocks Under $49" for FREE for a limited time only.

Treasury Inflation-Protected Securities (TIPS) are designed specifically to contend with rising prices. Their interest rates and principal rise based on the Consumer Price Index. The U.S. Treasury auctioned off its first TIPS notes in 1997, and they're now generally offered in 5-, 10-, and 30-year maturities.

The typical investor might find it easier to buy them in managed funds such as the iShares Barclays TIPS Bond ETF, which currently is yielding about 5.5%. Like all publicly traded stocks and bond funds, this kind of investment offers the liquidity to quickly bail out if conditions change.

ALSO READ: What Is Liquidity?

The problem with conventional bonds -- both government and corporate -- is that their principal value declines as rates rise. But so do the rates that newly issued bonds pay. Unless you're a bond trader yourself, the best way to invest in conventional bonds may be through bond funds. A good example here is the Vanguard Long-Term Corporate Bond Index Fund, which currently is yielding about 4.6%.

Real estate investment trusts (REITs) are income-producing pools of real estate whose owners are required to pay at least 90% of their taxable income out to shareholders. They offer both share price appreciation (and decline) and passive income.

There are about 225 publicly traded REITs. Two good choices to consider here are retail real estate owner Agree Realty, currently yielding about 4.1%, and hospital owner Medical Properties Trust, currently yielding about 6.2%.

ALSO READ: These REITs Won't Grow Your Money Overnight But Are No-Brainer Long-Term Buys

Like owning REITs, directly owning income-producing real estate can help you fight inflation by giving you the ability to raise the rents in line with rising prices. Well-bought and well-managed residential and commercial real estate alike can also provide you a handsome profit when the time comes to sell.

How much you make along the way depends on a lot of things, including how much of the management and maintenance you want to do on your own.

Online crowdfunded real estate platforms are a relatively recent phenomenon and they're growing fast, with some boasting of hundreds of thousands of investors and billions in investments. Some require investors to be accredited and have minimum investments of tens to hundreds of thousands of dollars to access private deals, while others allow entry for only a hundred dollars or less.

Crowdfunding isn't as liquid as owning stock but does offer investors the ability to choose exactly which retail or multifamily development they want to plunk some inflation-fighting dollars into, at least those that are on that particular platform. Some big names here include CrowdStreet and RealtyMogul.

5 Stocks Under $49
Presented by Motley Fool Stock Advisor
We hear it over and over from investors, "I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of "5 Growth Stocks Under $49" for FREE for a limited time only.

Inflation and recession fears have helped drive stocks down sharply so far this year, but they remain a good way to build wealth over the long term.

That means now is a good time to jump in and stay in as long as it works for you, and it's hard to find an easier way to do that than simply investing in an S&P 500 index fund.

Since 1992, for example, the Vanguard 500 Index Fund has turned $10,000 into $169,000. That's good for a compound annual growth rate of an inflation-beating 9.88%.

ALSO READ: How Index Funds Work and Why They're the Easiest Way to Invest

Putting all your eggs in one basket isn't recommended for anyone, right? That certainly holds for investing. Along with diversifying among stocks, bonds, cash, and whatever else makes sense to you, consider diversifying internationally. It's a big world out there, and not all markets march in tandem.

Along with individual stocks, there are hundreds of regional and country-specific stocks and bond funds that could merit some of your investment dollars as inflation works its way differently through all these markets. Examples include the T. Rowe Price Global Multi-Sector Bond Fund, currently yielding about 3.1%, and the Global X MSCI Nigeria ETF, currently yielding about 4.6%.

Crypto hasn't been around long enough to have much history as an inflation-fighting investment, but it does have one thing going for it: built-in scarcity. There's no precisely known amount of gold in the world -- either mined or still in the ground -- but we know how much Bitcoin is out there and can be produced.

If the market still values it as time goes on, that and other popular cryptocurrencies can, indeed, be true inflation fighters. Again, do your due diligence and choose carefully. Transparency and liquidity might be your best friends here.

ALSO READ: How Does Cryptocurrency Work?

Even with inflation and interest rates rising, we're a long way from the 10% and more that savings accounts and CDs paid a couple decades ago. Right now, for instance, the Vanguard Federal Money Market Fund is paying 0.03%.

Might as well keep it in your mattress. Some of the big banks are paying 2% to 2.5% or so for CDs, if you want to tie up your money for two to five years. None of these are inflation-beating, but they are safe places to stash cash while you decide what else to do with your investable assets.

Got the gold bug? That's a common inflation infection. Of all commodities, gold has perhaps the longest, richest history as a source of stored value. Right now, it's worth about $1,850 an ounce, and that's actually down from about $1,900 at this point last year. Oil, meanwhile, is at about $115 a barrel, up about 70% in a single year.

There are multiple ways to invest in nearly any commodity, from operating companies like Chevron to mutual funds like the Allspring Precious Metals Fund and exchange-traded funds like Teucrium Wheat ETF for the agriculture minded, to simply buying gold from a bullion dealer and keeping it in a safety deposit box. Do your due diligence and prepare to hold on for the long haul.

5 Stocks Under $49
Presented by Motley Fool Stock Advisor
We hear it over and over from investors, "I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of "5 Growth Stocks Under $49" for FREE for a limited time only.

"These are the times that try men's souls," the great pamphleteer Thomas Paine wrote in December 1776. Of course, he was writing about the American Revolution as it was unfolding. We're only discussing inflation here.

But the latter is very real and very challenging, and how you respond to the stresses that rising prices put on your daily spending and long-term investing alike will have a lot to do with your ability to financially withstand the challenges and enjoy the opportunities ahead. Do your homework and strategize wisely.

Marc Rapport has positions in Agree Realty, Medical Properties Trust, and iShares Barclays TIPS Bond Fund. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.