Two ways to hedge inflation in your portfolio

The Federal Reserve is hoping its higher-for-longer rate stance will help bring inflation down to its 2% target. But so far, inflation has proven to be stubborn and it's likely going to take more time for the Fed to get what it wants. So how do you prepare your portfolio for sticky inflation?

GLOBALT Investments Senior Portfolio Manager Thomas Martin has two "fairly easy" ways to help investors hedge inflation risk. Watch the video above to find out what they are.

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This post was written by Stephanie Mikulich.

Video Transcript

And so with inflation keeping above the fed's 2% target, how can investors hedge that risk in their portfolios?

Right.

So, uh people are rightly worried about inflation over the long term.

And uh there's really two ways that are fairly uh easy, I guess um to hedge that inflation.

And the first is one people don't think about uh very often uh because it's, it's just sort of standard investing and that is to invest in good profitable companies that are growing their earnings and their cash flow.

And the reason that that works is that they are creating value and the value of what they're creating um makes it um you know, more valuable and therefore, uh outpaces just a general level of, of prices going up.

Um So you really can hedge inflation um by being invested in, in businesses that um that are tapping new markets and growing in existing markets and growing their earnings.

So that's one way to do it.

Um And, and most people are already there in, in a part of their portfolios.

Um The second way is fairly well known is through inflation hedges um in commodities and specifically, um in gold um which has been for thousands of years, um a store of value in an inflation hedge.

Um and it's not an exact 1 to 1.

Um but it is a way to put aside some money in your portfolio for something that has acted as a hedge for a long time.