Investing is one of the most effective ways to outpace inflation over time. When you invest your money, you are essentially putting it to work for you.

Inflation is the general rise in prices over time. When prices go up, your money loses purchasing power. This means that if you just hold onto your cash, it will lose value over time. However, when you invest your money, it has the opportunity grow at a faster rate than inflation. This means that you could actually grow your wealth over time, even if inflation is rising.

Investing vs. Inflation

For example, if inflation rises at 2-3% per year, that means your dollar is losing 2-3% of its value every year. But if you invest into a diversified portfolio that gains 7-8% per year, you could have a net gain of 5% per year. As we know, all investing involves risk, and returns are never guaranteed. Some years, inflation may be high and investment returns might be low, but investing consistently over time is a proven way to outpace inflation over the long haul.


Investment returns vs. inflation


The best way to invest your money will depend on your individual circumstances, including your age, health, and your personal goals. Not sure where to start? We can help craft a personalized investment plan to help meet your long-term goals. 


Investing to beat inflation:

  • Start early. The earlier you start investing, the more time your money has to grow using compound interest. Even if you can only invest a small amount each month, it will add up over time.
  • Invest in a diversified portfolio. Don’t put all your eggs in one basket. Invest in a variety of asset classes, such as stocks, bonds, mutual funds, or real estate. This will reduce your risk and help you grow your money over time.
  • Reinvest your earnings. When your investments earn money, reinvest the earnings back into your portfolio. This will help your money grow even faster and keep your year-to-year tax responsibility lower.
  • Stay patient. Investing is a long-term game. Don’t expect to get rich overnight. Remember, investing is not the same as gambling! Slow and steady wins the race, so be patient and let your money grow over time.

A good steward recognizes the need to outpace inflation. Proverbs 27:12 says, The prudent sees danger and hides himself, but the simple go on and suffer for it.” We know that inflation will continue to happen, and that a dollar will not hold its value for 50 years. The prudent person sees that, and puts together a plan to increase the value of his investment, so they can put it to good use. 

By following these tips, you can grow your wealth, outpace inflation, and reach your financial goals.


Securities & Advisory Services offered through Geneos Wealth Management. Member FINRA/SIPC.