Worried about inflation? Here are 3 ways to hedge against a weakened dollar

Recent interest rate cuts were welcomed by property buyers, but investors and traditional savers were not as happy. On traditional savings accounts and other low-risk investment options, these lower rates translate to diminished returns, making it challenging for savers to preserve and grow their wealth.

As the appeal of conventional savings declines, exploring alternative assets becomes increasingly attractive. Alternative investments are assets that provide a buffer against economic fluctuations and are less tied to the stock market’s ups and downs.

Three noteworthy options are real estate, gold, and art. Each offers unique benefits and historically lower correlations with equity markets, making them resilient choices in uncertain financial landscapes.

Earn solid returns with stocks

Stocks are one of the smartest ways to guard your wealth against inflation. When the prices of goods and services rise, companies often adjust by passing those costs on to consumers, which can drive up their revenues and, ultimately, their stock prices. As an investor, you can benefit from the upward movement in both company earnings and stock values, helping to keep your investments in line with or even ahead of inflation.

Even if you don't consider yourself well-versed on the subject of investing, using an online brokerage like CIBC Investor's Edge can help you get started with stocks and develop a strategy to hedge against inflation.

Many solid, established companies pay dividends, and some even increase them every year. This dividend growth can be a powerful tool for investors looking to keep their income growing in step with the cost of living. By reinvesting those dividends, you can compound your returns, building a financial cushion that strengthens over time. Sectors like utilities and consumer staples, known for their stability, tend to maintain this steady dividend growth, making them particularly effective in inflationary times.

Investing in stocks can be a proactive strategy to not only protect but grow your wealth, regardless of where inflation is headed. Build your own investment portfolio with the CIBC Investor's Edge online and mobile trading platform and enjoy low commissions. Get started today!

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Cash in on the strength of gold

Investing in gold is often considered the go-to inflation-fighting move. It can’t be printed out of thin air like fiat money, and its value is largely unaffected by economic events around the world. And because of the precious metal’s safe-haven status, investors often rush toward it in times of crisis, making it an effective hedge.

Unfortunately, it’s a bit of a process to buy bullion bars or coins — often requiring in-person transactions and pickup.

An easier option is to invest in gold or precious metals using an exchange-traded fund (ETF). For instance, the iShares Gold Trust (NYSE: IAU) fund offers exposure to the day-to-day price movements of gold bullion, while the Aberdeen Standard Physical Gold Shares ETF (NYSE: SGOL) holds physical gold bullion (stored in vaults).

Over the past five years, the annualized returns for gold funds have outperformed the S&P/TSX Composite Index (TSX: GSTSE) with iShares Gold Trust earning 11.63%, Aberdeen Standard Physical Gold Shares ETF earning 12.40% compared to the 8.66% returns of the S&P/TSX Composite Index.

To unlock the potential of gold and precious metal ETFs, use a trusted online trading platform like Questrade. Whether you're looking to hedge against inflation, diversify your portfolio, or invest in the growth potential of precious metals, Questrade makes it simple and accessible. With advanced tools, research insights, and a user-friendly interface, you can trade top gold ETFs and access a broad range of precious metals options anytime.

Tap the surging value of cryptocurrency

Cryptocurrency operates independently of traditional financial markets. Unlike stocks and bonds, which are influenced by corporate earnings and interest rates, cryptocurrencies often respond to different factors such as technological innovation, regulatory shifts, and adoption trends.

This low correlation can help reduce overall portfolio volatility and enhance returns, especially during times when conventional markets are underperforming. Low correlation also means that investments in cryptocurrency can help diversify your portfolio and, at times, amplify the returns.

An added benefit is that global, decentralized nature of crypto assets enables investors to invest in opportunities beyond geographic and institutional boundaries, further enhancing diversification.

While there are crypto platforms that specialize in all digital an non-fiat currencies an easy way to start investing in crypto is to open a standard equities and options trading account with Wealthsimple before opening a cryto account. As a trusted discount brokerage platform, Wealthsimple offers simple, easy-to-learn tools that will help you get started in cryptocurrency trading.

Trade and stake coins with Canada’s first regulated crypto platform. Plus, get a $25 cash bonus when you open and fund your first Wealthsimple account and fund with at least a $1 within 30 days. Terms and conditions apply.