Enjoying the show? Support our mission and help keep the content coming by buying us a coffee.Inflation—even the projected 2.9% average for 2025/2026—is a silent thief that erodes your purchasing power. Just holding cash is the biggest mistake you can make; that $100,000 parked today could only buy ≈$85,000 worth of goods five years from now. You absolutely must put your money to work just to keep pace.We unpack the essential strategies to stop your purchasing power from melting away, focusing on tax hacks, leveraging fixed-rate debt, and finding stocks with true resilience.Strategy 1: The Safest Hedge (And Its Tax Trap)The Asset: Treasury Inflation Protected Securities (TIPS) are U.S. government bonds structurally designed to hedge inflation, as their principal value adjusts with the Consumer Price Index (CPI).The Benefit: They guarantee you get back the adjusted principal or your original amount, whichever is higher.The Trap: The "Phantom Income" Tax. The inflation adjustment—the increase to your bond's value—is counted by the IRS as taxable income in the year it happens, even though you won't receive the cash until maturity. This forces you to front the cash for taxes.The Hack: To avoid this surprise tax bill, hold TIPS only inside tax-advantaged accounts (like an IRA or 401k).Strategy 2: The Tangible Hedge (Debt Destruction)Real estate is a classic hedge that has beaten inflation ≈85% of the time over a five-year period since the mid-1980s.The Secret Sauce: Inflation-Induced Debt Destruction. If you locked in a fixed-rate mortgage years ago, inflation actively makes that debt cheaper over time. You are paying back the loan with dollars that are worth less than when you borrowed them.Alternative Access: If direct ownership is too much hassle, Real Estate Investment Trusts (REITs) provide exposure to rental income streams, though they can be volatile and mimic the stock market.Strategy 3: The Pricing Power AdvantageWhile high inflation historically squeezes profit margins, the modern market suggests stocks can be a store of value. You must be highly selective:Pricing Power is Key: Focus only on companies that can pass their rising costs (materials, labor) directly onto their customers without losing business. This includes consumer staples (e.g., household goods, food) and reliable sectors like utilities and energy.The Buffer: Dividend-paying stocks can also offer a necessary buffer against inflation.The Final Strategic DefenseThere is no single magic bullet; diversification is everything. You need a combination: stability from TIPS, the tangible debt destruction advantage of real estate, and the growth potential from select stocks.Rebalance Aggressively: Inflation erodes the value of cash and fixed income, which can leave your portfolio overweighted towards riskier assets than you intended. You must actively rebalance (shifting money into more inflation-resistant assets like TIPS or real estate) to maintain your target risk level.The Money Illusion: Don't just look at your nominal account balance and cheer. If your account went up 5% but inflation was 6%, you lost ground in real terms. Success means focusing on preserving and growing your purchasing power.Final Question: Knowing the legislative risk of the Backdoor Roth IRA closing in 2026, what is the real cost of delaying even one more year to secure decades of tax-free growth?

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