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

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. If you open a CIBC Investor's Edge account before March 31, 2025, you get $100 in free trades plus $200 or more in cash back and can start making your money work for you.

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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 (IAU) fund offers exposure to the day-to-day price movements of gold bullion, while the Aberdeen Standard Physical Gold Shares ETF (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, with iShares Gold Trust (IAU) earning 11.63%, Aberdeen Standard Physical Gold Shares ETF (SGOL) 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 value of artwork

You might think that investing in fine art by the likes of Banksy and Andy Warhol is only an option for the ultra-rich. It’s not. And it shouldn’t be.

Looking at the auction sales of contemporary fine art pieces from 1995 to 2024, and the average appreciation on these blue-chip contemporary artworks was 11.4% per year. This is higher than the average 10% annualized return of the S&P 500, for the same period (includes dividends reinvested).

In a 2024 survey from UBS, more than 85% of the high-net-worth (HNW) population felt that art was a safe investment compared to traditional assets, such as stocks, particularly in times of economic volatility. A similar number of respondents agreed that art is a useful asset, when it comes to diversification within an investment portfolio.

But to trade in art you need deep pockets — unless you use an art investment platform, such as Masterworks.

With Masterworks, you can invest in iconic artwork offerings and tap into the potential appreciation of fine art, just like other billionaire investors in this asset class including Jeff Bezos, Oprah Winfrey and Steve Cohen.

And investing with Masterworks lets you bypass a lot of the drawbacks of art investing — you won’t need to scour garage sales looking for a lost work by a master, and you don’t need art expertise or millions in the bank to diversify with a new asset class.

It’s easy to join the Masterworks’ art investing platform with Masterworks handling every step, from authentication and acquisition to storage and sale — no art expertise or billionaire’s chequebook needed. Masterworks has already distributed more than USD$60 million in total proceeds (including principal) back to investors across their 23 exits — and recently posted a profitable return from selling a Basquiat painting for USD$8 million. You can invest with Masterworks in minutes at this link.

Investing Involves Risk. Past performance is not indicative of future returns. See Important Disclosures at masterworks.com/cd.

Art vs S&P Price Appreciation Data based on repeat-sales index of historical Post-War & Contemporary Art market prices and S&P 500 annualized return (includes dividends reinvested) from 1995 to 2024, developed by Masterworks. There are significant limitations to comparative asset class data. Indices are unmanaged and a Masterworks investor cannot invest directly in an index.

Celebrities referenced are not investors in Masterworks Offerings. Their affiliation with artists is not an endorsement of Masterworks.

This communication is sent exclusively from Masterworks and is not endorsed by or affiliated with UBS. Masterworks did not contribute to the creation of the linked content. The report is not intended to be regarded as investment advice, an offer, or solicitation of an offer to enter into any Masterworks offering.