Ethyx Club
December 2, 2025
Saving and earning money go hand-in-hand. Both are equally challenging. It is also a well-known fact that the value of money decreases over time. Inflation is measured by considering price increases in staples often purchased by general public.
To put it simply inflation is the rising prices of everything around you. This is followed by decrease of the purchasing power of your money.
Inflation is a natural occurrence in the market economy. There are many ways to guard against inflation. One can plan for inflation by investing in different credit opportunities or asset classes that outperform the market during inflationary situations.
Market fluctuations and economy change due current events result in inflation. Rising wages and rapid increases in raw materials, such as oil, are two factors that contribute to inflation.
It is quite difficult to predict how long inflation would be higher than historical averages. It might last longer than anyone would prefer. You can ensure that your purchasing power can stay up by learning how to combat inflation both now and in the future. It can be don in the following way-
* Stay financially healthy with a budget: in this dynamic economy, the prices of food and energy are ever changing. It is hitting us even now in our budgets. A robust and planned spending needs to be done in order to tackle inflation.
* Diversified portfolio: having a diversified mix of stocks, bonds, and other credit opportunity that aligns with your personal goals is recommended. However, this does not guarantee gains or prevent losses. But it does help to deal with inflation to an extent. For people with a long time frame for investing, the growth potential of stocks can make the risks worth it.
* Improve your emergency fund: with the cost of essential items rising at a much faster pace, the emergency funds also need a boost.
* Review your insurance: having a sufficient life insurance is recommended. It is always great to have a secured and insured plan for your later years and retirement.
A person always wants to maximise their yield while trying to minimize their risk. A few tools to tackle inflation are listed below-
* Gold: gold has always been considered as the go-to option to tackle inflation. In fact, gold is often termed as 'alternative currency' due to its popularity amongst people. Gold is a real, physical asset and tends to hold its value.
But holding onto an asset that pays high yields to your wealth is definitely better than gold which pays no return. But like in any strong portfolio, diversification is the key. Hence, gold can be considered a good credit opportunity.
* Real estate: it refers to the income earned by renting out a property. It works well with inflation. This is because as inflation rises, the value of property also rises. Simultaneously, the amount charged by the landlord as rent also increases. This helps to keep up with the inflation.
The landlord is able to earn higher rental income over time due to this. Hence, this is a good credit opportunity to consider to tackle inflation.
* Commodities: it is a broad category that spans across grains, precious metals, electricity, foreign currencies, emissions and other financial instruments. Commodities and inflation have a unique relationship. In this, the commodities are an indicator of inflation to come. As the price of the commodity rises, the price of the products that the commodity is used to produce also rises.
Commodities are highly volatile. Even a slight change in the supply due to geopolitical issues can adversely affect the prices of the commodities. Hence, caution is advisable for this credit opportunity.
* Stock/bond portfolio: a 60/40 stock/bond portfolio is considered safe. This portfolio is an upfront, easy credit opportunity.
This 60/40 portfolio ratio does help to balance out the inflation issues. But in the long run it might not give high yields.
* Leveraged loan: it is a loan that is made to the companies that have high level of debts or low credit score. These risks of default are higher in these loans. Hence, they are more expensive to the borrower. Like every credit opportunity, leveraged loans involve trade-off between returns and risks. Some of the risks involved are liquidity, credit defaults and fewer protections.
Leveraged loans generally have fewer restrictions to protect the lender than traditional loans. This could leave a fund exposed to greater losses if the borrower is unable to pay back the loan.
Inflation is a slow, long-standing socio-economic phenomenon that affects people on a personal level. However, it is not something new. Over time, various market strategies have developed to counteract inflation.
Inflation is mainly caused by demand-pull or cost-push factors. Overcoming inflation is possible, but it's important to consistently realign your portfolio to adapt to the current rates of inflation.