How to Make Your Investment Plan Inflation-Proof?

Smart Investment Strategies to Beat Inflation

Here are some of the key inflation-proof investing strategies that you can consider while building your long-term investment portfolio.

Invest in Equities for Long-Term Growth

Equity as an asset class has historically delivered inflation-beating returns over the long run. A report on Nifty 50’s journey of 25 years ( 1999 to 2021) suggests a CAGR ( compound annual growth rate) of 14.2% for the period, outpacing the average inflation rate. Especially when you invest in diverse sectors, it reduces your portfolio risk along with optimising your return potential. There are various options to invest in equities, such as direct equity, exchange-traded funds, equity mutual funds and more.

In response to inflation, companies can raise their product price and pass them on to consumers. This helps them grow their profit and revenues, benefiting the investors. Hence, equity is considered the best option for long-term investing to beat inflation. However, it is important to study the business, its fundamentals, and seek expert help before you invest.

Invest in Gold and Commodities

Since ancient times, gold has always been viewed as a hedge against inflation and volatility. In India, gold prices surged over 200%, from INR 30,000 in 2019 to INR 1,00,000 per 10 grams in 2025. Gold EFTs (exchange-traded funds) have given an average return (category average) of 19% in the last five years.

During uncertainty and rising prices, investors often rely on gold and other commodities, which results in higher demand driving up the prices. Gold as an asset class is considered a store of value. Hence, many financial advisors allocate 5% to 10% of the portfolio to gold and other commodities.

Invest in Inflation-Protected Securities

Inflation-protected securities and inflation-indexed bonds can be a wise consideration in your long-term investment plans to protect your wealth against inflation. These bonds and securities adjust their principal and interest payouts based on inflation. Returns of these securities are usually tied to the Wholesale Price Index (WPI). Inflation inflation-indexed national savings certificate issued by the Government is a perfect example of this.

Consider Investing in Real Estate

Real estate as an asset class is a tangible hedge against inflation. It is wise to include real estate in your inflation-proof investment plans for the long run to preserve your wealth against rising prices.

With rising demand and rapid urbanisation, property investments are a lucrative option for investors in India, especially in metro cities and many tier II cities. Not only property value appreciation, but rental yields are also modest in most cities. The rate of property value appreciation and rental yield may vary from city to city, thus making market study an important aspect. However, illiquidity and other challenges need to be kept in mind. If you feel investing in property is capital-intensive, Real Estate Investment Trusts (REITs) can also be considered for an investment plan.

Asset Allocation and Diversification are the Keys

When you make inflation-proof investment plans, asset allocation plays a crucial role. It is important to assess your risk-return profile and then decide how much to allocate for each asset class – equity, gold, debt, real estate, etc. Similarly, diversifying across sectors and asset classes plays a vital role in bringing down the overall portfolio risk, maximising the return potential against the rising prices.

Actively managed mutual funds that invest across asset classes and sectors help in balancing the risk and return for the long term, delivering inflation-proof returns. Similarly, Unit-linked Investment Plans (ULIPs) offered by the insurance companies are also great inflation-proof investment options for long-term goals like children’s education, marriage and retirement.

At Jio Insurance Broking, you can compare various investment plans offered by the different insurance companies based on their feature, benefits and cost, helping you make an informed choice. You can customise these plans as per your needs and invest in the right one after careful comparison online.

Conclusion

To conclude, it is important to have a smart inflation-proof investment plan to create and preserve wealth successfully over the long term. Inflation can erode your wealth when the portfolio has a heavy allocation towards safe investments like fixed deposits. Equity, gold, real estate, mutual funds and ULIPs are great options to make your portfolio inflation-proof. It is important to diversify and do asset allocation based on your age, financial goals and risk tolerance.