Investing Strategies for High Inflation

Prices are up. Rates are high.
Here’s how to make your money work harder when inflation is eating into your returns.

This is educational content only. Trade for Good doesn’t provide investment advice. Consider your own situation before acting or chat to a licensed financial adviser.

First, what’s actually happening right now?

Inflation in Australia is sitting at 3.8%. The RBA’s target is 2–3%. We’re above it, and the RBA has said it doesn’t expect inflation to fully settle until late 2027. That’s a long time to just wait it out.

The good news? There are proven strategies that have historically helped investors protect and even grow the real value of their money during inflationary periods. Let’s walk through them.

  1. Buy value, not hype

When interest rates are high, the future is expensive. Businesses that promise big profits down the track get punished, because those future profits are worth less when you discount them at today’s rates.

What works instead? Companies generating real cash flow right now, trading at a reasonable price.

This is called value investing and it’s been quietly outperforming for the past 18 months on the ASX while the headlines were all about AI and tech.

Think resources, banks, and industrials. Not stories. Numbers.

Try: BHP (BHP.ASX), Rio Tinto (RIO.ASX), or a broad ETF like Vanguard Australian Shares (VAS.ASX) for diversified exposure.

  1. Get paid while you wait – dividends

If inflation is running at 4% and your savings account pays 4%, you’re going backwards once tax kicks in.

Dividend-paying shares can help close that gap. Better still Australia’s franking credit system means a fully franked dividend is worth more than its face value for Australian tax residents. That’s a genuine edge that most other countries don’t have.

The key is finding dividends that are sustainable and growing, not companies paying out more than they earn just to look attractive.

Try: The big four banks, BHP (BHP.ASX), Fortescue (FMG.ASX), Wesfarmers (WES.ASX) or the Vanguard High Yield ETF (VHY.ASX) which filters for this automatically.

  1. Own the stuff that gets more expensive

This one is pretty simple. When prices rise, the things we dig out of the ground become worth more.

Australia is one of the world’s biggest commodity exporters; iron ore, copper, gold, coal. That’s a structural advantage most countries don’t have. When global inflation picks up, our resources sector often benefits directly.

Copper is particularly worth knowing about right now. It’s essential for electrification, renewable energy infrastructure, and EV manufacturing. Demand is structural it doesn’t go away when inflation eventually cools.

Try: BHP (BHP.ASX) or Rio Tinto (RIO.ASX) for diversified mining exposure. The VanEck Australian Resources ETF (MVR.ASX) returned over 40% in 2025 as the materials sector surged.

  1. Gold still works

It’s been doing this for thousands of years. When people worry that paper money is losing value, they buy gold.

Central banks globally have been buying gold at record levels. Precious metals like gold are likely to remain strong as a hedge against inflation risks and geopolitical uncertainty.

You don’t need to buy coins and store them under your bed. The ETFS Physical Gold ETF (GOLD.ASX) holds actual physical gold. The BetaShares Global Gold Miners ETF (MNRS.ASX) gives you exposure to the companies that mine it.

  1. Infrastructure – prices go up automatically

Some businesses have their income legally tied to CPI. When inflation rises, their revenue rises with it no negotiation required.

Transurban is the classic ASX example. Its toll road contracts with state governments allow it to raise tolls each year by CPI or at least 4% whichever is higher. It can turn low-to-mid single-digit volume growth into much stronger profit growth through efficiency gains and inflation-linked pricing.

Industrial property trusts (A-REITs) with inflation-linked rental clauses work similarly. Just avoid retail and office REITs they face different pressures.

Try: Transurban (TCL.ASX) or look for industrial A-REITs with CPI-linked leases.

  1. Inflation-linked bonds – slow and steady

Not every dollar in your portfolio needs to swing with the market.

Inflation-linked government bonds are exactly what they sound like; Australian government bonds whose returns are adjusted for CPI. If inflation runs at 3.8%, your return adjusts accordingly.

They won’t make you rich quickly. But in a volatile, high-inflation market they act as a stabiliser – protecting the real value of that part of your portfolio while your other holdings do the heavier lifting.

Try: iShares Government Inflation ETF (ILB.ASX).

  1. Invest regularly – stop trying to time it

In a market where a single inflation print can send the ASX down 1% in a day, trying to pick the perfect entry point is a losing game.

Dollar-cost averaging fixes this. You invest a fixed amount at regular intervals weekly, fortnightly, monthly regardless of where the market is. When prices are down you automatically buy more units. When prices are up you buy fewer. Over time your average entry cost smooths out.

It’s not exciting. But it works – especially in volatile markets.

Set up a regular investment into a broad ETF and let compounding do the heavy lifting.

  1. Think in real returns, not just numbers

This is the mindset shift inflation forces on every investor.

A 6% return sounds solid. But if inflation is 4%, your real return is only 2%. Once you add tax on top, you might barely be keeping pace.

Run every investment decision through this filter:
what do I actually keep after inflation?
It shifts the conversation away from cash and low-yield fixed income and toward quality equities, commodities, infrastructure, and gold.

The Bottom line

None of these strategies require you to predict what the RBA does next. They’re about making sure your portfolio is structurally positioned to hold its real value  and ideally grow it however long inflation sticks around.

Strategy The simple reason it works
Value investing Real earnings today beat promises of tomorrow
Dividend investing Franked income helps offset rising prices
Resources and commodities Own what gets more expensive
Gold Oldest inflation hedge going – still relevant
CPI-linked infrastructure Revenue rises automatically
Inflation-linked bonds Steady, certain, CPI-adjusted returns
Dollar-cost averaging Takes timing risk off the table
Focus on real returns Filter every decision by what you actually keep

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