As of last month, inflation sits at 2.8%, according to the latest U.S. Bureau of Labor Statistics report — still above the Federal Reserve’s 2% target.

Inflation is a sneaky pickpocket that drains your money’s value. One day, your grocery bill looks normal. The next, it’s a second rent payment. Meanwhile, that “solid” 5% return on your investments shrinks to 2% once inflation takes its cut.

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But not every investment crumbles under inflation. Some remain strong while prices rise. Here are five smart investments that can hold their ground and even make you money while the rest of the market struggles.

TIPS are government bonds designed to hedge against inflation. Unlike regular bonds, their principal adjusts based on the Consumer Price Index (CPI) to help preserve purchasing power. They also pay interest twice a year, which offers a steady income.

So far in 2025, TIPS funds have delivered solid returns, with the Vanguard Inflation-Protected Securities Fund (VIPIX) up 3.4% year-to-date.  Rising inflation expectations — partly due to tariff concerns and economic slowdown fears — have boosted demand for inflation-protected assets.

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Since TIPS are tied to the official Consumer Price Index (CPI), they protect against general inflation. But if key personal expenses like rent, healthcare, or tuition are rising faster than CPI, TIPS may not fully shield you from higher costs.

Real estate is a classic inflation hedge since property values and rents tend to rise with inflation. REITs let you invest in real estate without owning physical property, offering exposure to commercial buildings, apartments and shopping centers.

Because landlords can raise rents in response to inflation, many REITs maintain strong returns. From 2021 to 2024, national rental prices increased by an average of 7%, outpacing core inflation, according to Zillow’s Rental Market Report.

They also pay out most of their profits as dividends, which provides investors with a steady income.

Dividend-paying companies (especially in consumer staples, utilities and healthcare) can provide stability for investors.

For example, recent data highlights the strength of utilities as a reliable dividend sector. Companies like Duke Energy have remained stable despite market fluctuations, reporting earnings of $5.90 per share last year, with projections to grow to $6.32 this year and $6.72 by 2026. Duke Energy also offers a 3.5% dividend yield, which is higher than the S&P 500 average.