Investments protecting purchasing power against rising prices, which surged in popularity 2021-2022 as inflation hit 9.1% (June 2022)—highest since 1981. Traditional 60/40 stock/bond portfolios struggled as both assets declined simultaneously.
I Bonds (Series I Savings Bonds)
Treasury bonds adjusting interest rate every 6 months based on CPI inflation:
- Nov 2021 rate: 7.12% (went viral on r/personalfinance)
- May 2022 rate: 9.62% (all-time high)
- 2023 rates: Declined to 5.27% then 4.3% as inflation cooled
Limits: $10K/year per person via TreasuryDirect.gov, $5K additional via tax refund. Must hold 1 year; selling before 5 years forfeits 3 months interest. “Free money” at 9.62% when banks paid 0.5%.
Other Inflation Hedges
- TIPS (Treasury Inflation-Protected Securities): Principal adjusts with CPI
- Real estate: Rents and property values typically rise with inflation
- Commodities: Gold, oil, agricultural futures
- Stocks: Companies pass costs to consumers (theoretically)
- Crypto: Bitcoin marketed as “digital gold” (failed in 2022, down 60%)
2022 Reality Check
All hedges struggled:
- Bonds down 15% (rising rates)
- Stocks down 18% (S&P 500)
- Crypto crashed 70%+
- Real estate slowed (mortgage rates 3% → 7%)
Only commodity futures and I Bonds worked. Reminded investors: diversification across time, not just assets.
Sources:
- TreasuryDirect I Bond rate history
- BLS CPI inflation data
- 2022 portfolio performance studies