Gold
Commodities like gold are a hedge against inflation. This is mainly because the factors that affect the prices of gold are different from those that impact the prices of other assets like equities for instance.
Gold is a storehouse of value. When uncertainty afflicts global markets, investors prefer to take refuge in gold because in times of inflation (i.e. fall in purchasing power), gold prevents erosion in the value of the purchasing power.
Apart from the aforementioned assets, property and variable rate fixed deposits are other alternatives that investors may want to consider during inflation.
The moot point is that the investment landscape offers plenty of options to investors that can insulate them against inflation.
The onus is on the investor to make the most of these opportunities depending on his risk profile and investment objectives.
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Image: A customer selects gold bangles at a Tanishq jewellery showroom in Mumbai | Photograph: Indranil Mukherjee/AFP/Getty Images
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