High inflation hurts investors in a couple of different ways, according to financial advisors. But it also affects some stocks less than others, and it can even be good for certain sectors of the market.
Here’s what advisors say about investing during periods of high inflation, and how to find the best stocks for inflation.
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How does inflation affect stocks?
Advisors say that excessive inflation has two major effects on investors: It reduces the value of their money over time, and it motivates the Federal Reserve to take counter-inflationary actions — like interest rate increases — which can push down stock and bond prices.
“Let’s say you have money in the bank, sitting in cash, and let’s say inflation is at 3% to 6% — you’re losing 3% to 6% every single year,” says Angela Moore, an Orlando, Florida-based certified financial planner and a financial guide at Fruitful.
“Let’s say inflation is at 6%, and your investments are only making 4% — you’re still losing money," says Moore.
How to find stocks that do well in inflation
Moore and Satoru Asato, a Bloomington, Minnesota-based certified financial planner with McNellis & Asato, both say that certain sectors — and certain types of stocks — do better than others during inflationary periods.
Energy stocks
Asato says the energy sector is a good place to look for inflation-resistant stocks.
“When Russia invaded Ukraine, prices of food and oil went up. And as the price of gas at the pumps increased, you saw the oil companies do well,” he says.
Even when oil prices are high, consumers still need gas and buy it, sometimes choosing to cut spending in other areas.
A 2025 study by mutual fund issuer Hartford Funds showed that the energy sector has a historically high level of outperformance versus inflation.
Income-producing investments
Moore says investors should also consider income-producing investments such as real estate or dividend stocks.
Real estate investment trusts, or REITs — which invest in rental properties — can provide extra income, as REITs are required to distribute dividends to shareholders. Dividend stocks also give investors a portion of a company’s earnings on a regular basis.
“The income portion is usually more consistent than the market fluctuations,” Moore says.
Inflation-protected investments
There are some investments that are specifically designed to provide inflation protection, such as Treasury Inflation-Protected Securities and inflation-protected bond funds.
TIPS try to stay ahead of inflation by having their principal value adjusted every six months based on changes in the CPI. Inflation-protected bond funds use trading strategies to target returns that are at least equal to the inflation rate.
“In an inflation-protected bond portfolio, for example, the fund managers are buying and selling bonds based on current inflation rates, to basically keep up with the inflation rate. So they’re actively managing it to attack that problem,” Moore says.
Are there any truly inflation-proof stocks?
No, says Moore. There are no guaranteed inflation-proof investments — even among inflation-protected securities and funds.
“When we’re talking about investments, we never use the word ‘guaranteed,’” she says.
“The portfolio managers who manage [inflation-protected] strategies, they’re aiming to hit a certain target, but at the end of the day, they don’t control the market.”
» Learn more: Hyperinflation
How diversification can protect you from inflation
However, there is a way for investors to protect themselves against an inflation-related stock market downturn. One of the best ways to do that, according to Moore and Asato, is diversification.
“If you’re someone who has some exposure to alternative investments … that have low correlation to the stock market, that’s helpful,” says Moore.
Asato says investors who hold a variety of assets may be better equipped for a post-downturn recovery.
“With a diversified portfolio, there’s an opportunity to do better on the downside, and do better on the upside,” he says.
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- 1.Hartford Funds. Which Equity Sectors Can Combat Higher Inflation?. Accessed Jan 12, 2026.
