How to Make Better Financial Decisions in 2026: A Practical Guide to Smarter Wealth

Making better financial decisions isn't about chasing hot stocks or having a crystal ball. It's about building a disciplined, personalized process. At its core, this means knowing where you want to go, understanding how much turbulence you can stomach on the journey, and having a clear framework to guide you through the noise. Without this foundation, you're merely reacting to market headlines and gut feelings—a proven recipe for disappointment.

This guide, written with first-hand experience from helping countless individuals navigate their financial lives, will provide you with the original, in-depth analysis needed to build that foundation. We'll go beyond the obvious to give you actionable strategies, real-world examples, and the context you need to feel confident in your choices.

Lay the Groundwork for Better Financial Decisions

Before you can make smarter choices, you must define what "smarter" looks like for you. Your financial life is unique, shaped by your personal history, values, and ambitions. Therefore, your decisions must be tethered to your specific goals, timeline, and comfort with risk. This first step is about transforming vague wishes into a concrete plan you can execute.

A great way to kickstart this process is by setting New Year's financial resolutions, as it forces you to articulate your ambitions. It helps you move past fuzzy ideas and define what you truly want your money to achieve for you.

Turn Vague Goals Into Real-Life Milestones

Good financial goals aren't just numbers on a spreadsheet; they are the building blocks of the life you want to live. Instead of a generic goal like "I want to save $500,000," reframe it with emotional resonance: "I want to retire by 60 with enough savings to travel internationally twice a year and visit my grandchildren without financial stress." Tying money to a tangible, emotional outcome is a powerful motivator.

When you map out your goals, keep these principles in mind:

• Get Specific: Vague goals lead to vague actions. "Save for a down payment" is a wish. "Save $60,000 for a down payment on a three-bedroom house in the suburbs within the next five years" is a plan.
• Be Realistic: Your goals should stretch you, but they must be achievable. Setting an impossibly high target only leads to frustration and abandonment. Analyze your income and expenses to ensure your goal is grounded in reality.
• Prioritize Ruthlessly: You likely want to buy a house, travel, and retire early all at once. That's natural, but you must decide what comes first. Rank your goals to determine where your next available dollar should be allocated.

Figure Out Your Personal Risk Tolerance

Your risk tolerance is your emotional and financial capacity to watch your investments fluctuate without hitting the panic button. It's a core component of your financial DNA and dictates your ideal investment strategy. If your portfolio is too aggressive for your comfort level, you're setting yourself up for stress and poor, emotionally-driven decisions.

As a financial guide, I always tell people: your risk tolerance isn't about how much money you could lose; it’s about how much you can afford to lose sleep over. You must be brutally honest with yourself.

To get a clearer picture, ask yourself these questions:

• If my portfolio suddenly dropped 20%, would I sell everything in a panic, see it as a buying opportunity to invest more, or simply leave it alone?
• How far away is the goal I'm saving for? The longer your time horizon, the more risk you can generally afford to take, as you have time to recover from downturns.
• Is my income stable, or does it fluctuate? A reliable paycheck can provide the psychological buffer needed to stomach more investment risk.

See Where You Fit In: Common Investor Profiles

Your age, goals, and risk tolerance combine to create your investor profile. The right strategy for a 25-year-old is almost always the wrong one for a 65-year-old. Here’s a quick breakdown to help you see where you might fit.

Investor Profile	Primary Goal	Typical Risk Tolerance	What This Looks Like in Practice
Young Professional (20s-30s)	Long-term growth	High	They might allocate a significant portion (e.g., 80-90%) of their portfolio to growth stocks and equity ETFs, focusing on building wealth over several decades.
Mid-Career Family (40s-50s)	Balanced growth and preservation	Moderate	They are likely balancing stocks (e.g., 60-70%) and bonds (e.g., 30-40%) while also aggressively funding college savings and increasing retirement contributions.
Pre-Retiree (Late 50s-60s)	Capital preservation and income	Low to Moderate	The focus shifts from growth to protecting assets. They might hold a mix of dividend stocks, bonds, and other income-generating assets (e.g., 40-50% equities, 50-60% fixed income).

Once you've documented your goals and risk tolerance, you've created your personal financial rulebook. This foundation will guide every decision you make. To put these ideas into action, a great next step is learning how to create a monthly budget that aligns your daily spending with the big goals you've just set.

Get Out of Your Own Way: Taming Your Financial Biases

Let's be honest: when it comes to making smart money moves, the biggest enemy isn't a volatile market or a shaky economy. It's often the person staring back at you in the mirror.

Our brains are hardwired with mental shortcuts and emotional reflexes—cognitive biases—that frequently lead us astray financially. Acknowledging these built-in glitches is the first crucial step toward making better, more rational decisions.

We've all felt it. That rush of fear of missing out (FOMO) when a stock is soaring, tempting you to buy at its peak. Or the gut-wrenching pain of loss aversion. Behavioral economics studies, like those by Daniel Kahneman and Amos Tversky, show the pain of losing money is about twice as powerful as the joy of gaining it, which can easily trick you into panic-selling during a routine market dip. These are not personal failings; they are fundamental aspects of human psychology.

The Most Common Mental Traps in Finance

To master your finances, you must first spot these biases in your own thinking. Two of the most common culprits I've seen derail investors are confirmation bias and overconfidence bias.

Confirmation bias is our natural tendency to seek out information that validates our existing beliefs. If you're excited about a new investment, you might subconsciously devour positive news stories while scrolling right past articles highlighting potential risks. This creates a dangerous echo chamber where your initial idea goes completely unchallenged.

Then there's overconfidence bias, which convinces us we're smarter than the market average. Perhaps you got lucky with a couple of stock picks. Suddenly, you feel like a Wall Street prodigy and start taking on excessive risks, believing you can't lose. It’s a classic setup for a significant fall.

Here's a simple but incredibly effective trick I recommend to clients: enforce a mandatory "cooling-off" period. Before making any non-urgent financial decision over a predetermined amount—say, $1,000—just wait. Force yourself to step away for 48 hours. This pause deflates the emotional hype and allows your logical brain to re-engage.

Practical Strategies to Outsmart Your Brain

Waiting is a powerful tool, but you can also build more robust systems to counter these mental traps.

One of my favorite techniques is creating a "financial alter ego" or a "personal board of directors." Picture a super-rational version of yourself or a trusted mentor. When facing a big decision, stop and ask, "What would my logical alter ego do here?" This simple mental exercise helps you detach from the emotional pull of the moment. It's a skill that requires self-awareness, which you can learn more about by understanding how to build emotional intelligence in all aspects of your life.

Another powerful strategy is to "pre-commit" to your actions. This means you set your rules before the game starts. For instance, you could decide, "I will rebalance my portfolio to my target allocation every six months on January 1st and July 1st, regardless of market performance." This removes the temptation to make impulsive calls driven by greed or fear.

To help you spot these biases in the wild, I’ve put together a quick cheat sheet.

Common Financial Biases and How to Overcome Them

This table breaks down some of the most common psychological traps that impact our finances, along with real-world examples and simple strategies to fight back.

Cognitive Bias	Example in Finance	Mitigation Strategy
Loss Aversion	Real-Life Scenario: Sarah's retirement account dropped 10% during a market correction. Terrified of losing more, she sold all her stocks, locking in her losses just before the market rebounded.	Automate your investments. Set up recurring contributions and stop checking your portfolio daily. This "set it and forget it" method prevents reacting to short-term noise.
Confirmation Bias	Real-Life Scenario: Tom bought shares in a tech startup and only read news from tech blogs that praised the company's "vision," ignoring analyst reports that flagged its high cash burn rate.	Actively seek dissenting opinions. For every positive article you read, make yourself read one that argues the opposite. Play devil's advocate against your own best ideas.
Herding/FOMO	Real-Life Scenario: Mark saw his friends making quick money on a "meme stock." Fearing he'd be left behind, he invested a large sum without any research, just as the stock's price began to collapse.	Develop a personal investment checklist. Before you buy anything, ensure it meets your predefined criteria for your goals and risk tolerance—not just its current popularity on social media.

By recognizing that these mental shortcuts are part of our wiring, you can start building a more intentional financial life. The goal isn't to become an emotionless robot. It's about creating a smart framework that protects your long-term goals from your very human, short-term impulses.

Create Your Personal Decision-Making Framework

Alright, you’ve done the hard work of identifying your mental blind spots. Now it's time to build a system that prevents those biases from taking control. Great financial decisions don't happen by luck; they are the result of a reliable, repeatable process. This is where your personal decision-making framework comes in.

Think of it as your financial constitution. It’s a set of rules and guidelines you design when you're calm and rational, ready to be deployed when things get stressful or overly exciting. The purpose is to replace impulsive, emotional reactions with a structured approach that keeps your focus on your long-term goals.

A solid personal financial plan is the foundation of this framework, giving you the big-picture roadmap. Now, let’s get practical and break it down into rules you can use every day.

Establish Your Financial Guardrails

Financial guardrails are your non-negotiable, bright-line rules. They are pre-made decisions that act as an automatic "no" to anything that would steer you off course. Forget complex formulas—these should be simple, clear statements you can easily remember and follow.

Here are a few real-world examples I've seen clients successfully implement:

• "I will not invest in any product I cannot explain to a friend in two minutes." This rule prevents you from chasing complex, trendy investments you don't truly understand.
• "I will increase my retirement contribution by 1% every year on my work anniversary." This automates your progress and removes the annual debate with yourself.
• "I will never make an investment decision based solely on a social media post or a 'hot tip' from a friend." This is your shield against herd mentality and FOMO.

The power of these guardrails lies in their simplicity. You don't have to analyze anything in the heat of the moment because you've already done the thinking.

Build a Checklist for Major Decisions

For the big financial moments—buying a home, changing careers, or making a significant investment—a simple guardrail isn't enough. You need a checklist. Checklists are fantastic tools because they force you to slow down, be methodical, and consider all critical angles, not just the ones that are top of mind.

Your checklist acts as a circuit breaker for your emotions. It ensures you remain objective and thorough when the stakes are high and large sums of money are involved.

Let's take a real-life example: buying a car. A checklist moves you beyond just the sticker price. Yours might include:

• Calculate the total cost of ownership (insurance, fuel, average maintenance, taxes).
• Get pre-approved for a loan from my credit union before stepping into a dealership to gain negotiating power.
• Research reliability ratings (e.g., from Consumer Reports) for the specific make, model, and year.
• Test drive at least two competing models to avoid emotional attachment to the first car I see.

This process flips the script, transforming you from a reactive buyer into a prepared, empowered one. To make your checklist items even stronger, check out our guide on how to set SMART goals.

Real-Life Example: Comparing Two Mortgage Options

Imagine a family, the Jacksons, weighing two mortgage options. Without a framework, they might just grab the one with the lower interest rate. But with a checklist, their decision-making becomes far more sophisticated.

Decision Factor	Mortgage Option A (Lower Rate)	Mortgage Option B (Slightly Higher Rate)
Interest Rate	6.5% Fixed	6.75% Fixed
Origination Fees & Points	$6,500	$1,500
Prepayment Penalty	Yes, 2% of the balance if paid off in the first 3 years.	No, can pay off early without penalty.
Rate Lock Period	30 days	60 days
Monthly Payment	$2,212	$2,273

By using a simple comparison table, the Jacksons quickly see that Option A's lower rate hides high upfront fees and a restrictive prepayment penalty. They anticipate receiving a work bonus soon and want the flexibility to pay down their principal. Because of this, Option B is the clear winner for their situation, even with a slightly higher monthly payment. This is a perfect example of how a simple framework leads to a far better long-term financial outcome.

Making Sense of Today's Investment Market

If you've been following the market, you've likely noticed a peculiar trend. It feels as if we're watching two different economic stories unfold simultaneously. On one side, there's the explosive growth of companies tied to Artificial Intelligence (AI). On the other side, there's nearly everything else.

This isn't your imagination. It’s a real schism, and understanding it is critical to making intelligent investment decisions in 2026 and beyond. The old advice to simply "diversify" is no longer sufficient; you need a more nuanced game plan.

The Great Divide: AI vs. The Rest of the Market

We are witnessing a clear chasm opening between AI-driven sectors and traditional industries. J.P. Morgan Global Research has highlighted this divergence, suggesting it will be a defining feature of the economy in 2026. This forces every investor to make a conscious choice about their exposure.

This isn’t just about chasing the latest trend. While some whisper about an AI "bubble," many economists see real, sustained productivity gains and growth ahead. This presents a classic investing dilemma:

• Stick with what you know? Over-investing in non-AI sectors might feel safer, but you risk missing out on the primary engine of market growth.
• Go all-in on AI? This creates immense concentration risk. If the AI sector hits a rough patch, your entire portfolio could suffer a severe blow.

The sophisticated answer isn't to pick one side, but to be deliberate about how much exposure you want to each, based on your personal financial plan.

How Much AI Belongs in Your Portfolio?

There is no magic number. The right amount of exposure to a high-growth area like AI depends entirely on your age, financial goals, and when you'll need the money.

Your investment strategy should not be a reaction to the daily news cycle. It must be a direct reflection of your own life's timeline. The closer you are to retirement, the more your focus must shift from maximizing growth to protecting capital.

Let's break down what this looks like for different investors.

Matching AI Allocation to Your Investor Profile

Investor Profile	Time Horizon	Recommended AI Exposure	The "Why" Behind the Strategy
Young Investor (20s-30s)	30+ years	Higher (e.g., 20-30% of portfolio)	With decades ahead, you can embrace volatility for the potential of higher long-term returns. You have ample time to recover from market downturns and let compounding work its magic.
Mid-Career Investor (40s-50s)	10-20 years	Moderate (e.g., 10-15% of portfolio)	You are in a balancing act. You still need growth to outpace inflation, but capital preservation is becoming more important. A moderate allocation allows participation in AI's upside without excessive risk.
Pre-Retiree (60s+)	<10 years	Lower (e.g., 0-10% of portfolio)	Capital preservation is now your primary objective. Any exposure to high-growth, volatile stocks should be minimal, as you lack the time to recover from significant losses. Your portfolio should be dominated by stable, income-producing assets.

If you want to add this type of exposure without becoming a professional stock picker, a great place to begin is by learning how to start investing in index funds. Many funds are designed to track specific sectors or broad market trends that include these innovative companies.

Why You Can't "Set It and Forget It" Anymore

In an economy evolving this rapidly, the "set it and forget it" approach to investing is a recipe for falling behind. That growing gap between AI and other sectors won't remain static, making periodic portfolio reviews more crucial than ever.

Most financial advisors recommend reviewing your allocations at least annually, or quarterly for more active investors. This isn't an invitation to panic-sell based on a scary headline. It’s a calm, regular check-in to ensure your investments still align with your goals and the realities of the market. These small, strategic course corrections are what prevent you from making large, emotional mistakes down the road.

Adjust Your Strategy to Changing Market Returns

One of the biggest mistakes investors make is assuming what worked yesterday will work tomorrow. Markets are dynamic. Relying on past performance alone is like driving while looking only in the rearview mirror—it's a recipe for disaster. Smart financial decisions require you to adapt your strategy based on where the market is headed, not just where it's been.

A perfect real-world example is unfolding in the private credit market. For years, it was a favored asset class for investors seeking steady, high returns. That landscape, however, is changing rapidly.

When a Star Asset Class Loses Its Shine

Recent forecasts for private credit investments paint a much different picture for the coming years. BofA Global Research, for instance, projects that returns could fall from 9% in 2025 all the way down to just 5.4% in 2026.

That’s not a minor dip; it's a monumental shift. If you had $500,000 allocated to private credit, that’s the difference between earning $45,000 a year and earning $27,000. An $18,000 annual shortfall can completely derail your financial plan.

This is precisely why a forward-looking annual portfolio review is so critical. You must weigh the returns you’re getting against what the market is likely to offer for the risk you're taking.

Think of your investments like employees—each one has a job to do. If one of them stops performing up to expectations, you have to decide if they are still the right fit for the role or if it’s time to find a replacement.

Running Your Annual Portfolio Health Check

An effective annual review is more than just checking your account balance. It’s a proactive health check for your entire financial strategy.

Here’s a simple framework I use with my clients:

• Rethink Expected Returns: Start by researching forward-looking consensus forecasts for each asset class you hold. If you own an S&P 500 fund, what are the growth estimates? For your bonds, how might interest rate changes impact their future returns?
• Gauge the Risk vs. Reward: Is an asset still paying you enough for the risk it carries? In our private credit example, a 5.4% return may not justify its illiquidity when you could potentially find similar returns elsewhere with better access to your cash.
• Scout for Alternatives: If one of your holdings is expected to underperform, it’s time to research alternatives. What other investments could offer similar (or better) returns for a comparable level of risk?

This kind of proactive thinking helps you stay ahead of the curve.

Comparing Your Options in a Shifting Market

To make this tangible, let’s compare our changing asset class, private credit, against a potential alternative like high-yield bonds in this new environment.

Factor	Private Credit (2026 Forecast)	High-Yield Bonds (Corporate)
Expected Return	~5.4%	Potentially 6-7%
Liquidity	Low (often locked up for years)	High (can be sold daily on public markets)
Risk Profile	Moderate to High (Credit risk, illiquidity risk)	Moderate to High (Credit risk, interest rate risk)
Best For	Long-term institutional investors who don't need immediate cash access.	Individual investors wanting higher income with the flexibility to sell.

Suddenly, the choice isn't so obvious. What was once a top performer may no longer be the best fit for an individual investor. In this scenario, high-yield bonds might offer a more attractive risk-adjusted return, especially for someone who values liquidity.

Staying Ahead of Broader Economic Shifts

This proactive approach isn't just about individual asset classes; it's about seeing the bigger picture. For example, the projected growth in AI-driven sectors versus more traditional industries will have a huge impact on where the best opportunities lie.

This chart gives you a visual cue for where you might want to adjust your portfolio's exposure.

The data shows a clear divergence. It reinforces the need to actively decide how much you want to allocate to innovative sectors rather than just passively holding a traditional market-cap weighted mix. For more ideas on positioning your portfolio, you might find our guide on the 2025 inflation forecast helpful.

The bottom line is this: making better financial decisions means being an active participant in your own success. Stay informed, review your strategy against what's coming, and have the courage to make changes when the data tells you it's time.

Think Globally to Find International Opportunities

It’s comfortable to stick with what you know. For most investors, that means keeping their money close to home. But this "home-country bias" is a classic trap that can stunt your portfolio's growth and increase its risk. If you want to make truly better financial decisions in 2026, you must lift your gaze beyond your own borders and see the diverse opportunities the rest of the world offers.

The global economy isn’t a single, monolithic entity; it’s a collection of dozens of regional economies, each with its own unique rhythm. Crucially, they don't all move in perfect sync, and that's precisely where you can find an edge through diversification.

Look Past the Global Averages

On the surface, global economic growth might look steady. But that headline number can be deeply misleading—it papers over the vast differences in performance from one country to the next. The real story, and the real opportunity, is in the details.

For instance, the 2026 Economic Outlook from Mastercard reveals a world of contrasts. The U.S. economy is expected to see solid GDP growth of 2.2%. But then you look at a powerhouse like India, projected to expand by a massive 6.7%. Those aren't just numbers on a page; they represent wildly different climates for investment.

From my experience, the most insightful financial decisions often come from looking where others aren't. While many investors fixate on domestic news, the biggest growth stories are frequently unfolding thousands of miles away.

Seeing a ~5% growth rate in China next to a sluggish ~1.1% in the eurozone should immediately prompt the question: Is my money positioned to capture these powerful tailwinds, or is it stuck in the slow lane?

Turn Economic Clues into an Investment Plan

Knowing that India is growing faster than Germany is a good start, but it's not enough. The next step is to understand why and what that means for specific companies or sectors. This is how you move from merely consuming data to making an informed decision.

Each region’s growth is fueled by different engines, creating unique opportunities:

• Tech-Driven Economies: In a place like India, with its booming tech-export sector and a young, digitally-native population, you might find exciting potential in software, IT services, and digital payment companies.
• Government-Backed Growth: China's expansion is often supported by significant government stimulus and strategic initiatives. This could signal opportunities in infrastructure, electric vehicles, renewable energy, and other state-supported industries.
• The Rise of the Consumer: In parts of Southeast Asia or Latin America, a growing middle class has more disposable income. This puts a spotlight on companies selling consumer goods, from electronics to travel services.

The key is to connect the big-picture macroeconomic trend to the specific sectors driving it. It’s the difference between blindly buying a generic "international fund" and strategically investing in a country's core economic strengths.

Real-Life Examples: Allocating Globally

There's no single right answer for international allocation; it all comes down to your personal goals and risk tolerance. Let's walk through how two different people might approach this.

Investor Profile	Main Goal	Global Allocation Strategy	The "Why" Behind It
Sarah, 62, Nearing Retirement	Protect her nest egg and generate stable income.	Modest Global Stake (15%): She allocates 10% to developed markets (e.g., a European dividend ETF) and 5% to a broad emerging markets fund, avoiding single-country risk.	Sarah prioritizes stability and reduced volatility. A smaller, conservative international allocation provides diversification benefits without the high volatility of a heavy emerging market concentration.
Ben, 28, Early in His Career	Maximize long-term growth.	Significant Global Stake (40%): He allocates 20% to developed international markets and another 20% specifically to high-growth emerging markets in Asia and Latin America.	Ben has decades to ride out market turbulence. He can afford to take on the higher risk inherent in emerging markets for the potential to capture much higher long-term returns.

Ultimately, making better financial decisions means developing a global perspective. It's about actively questioning the comfort of a domestic-only portfolio and viewing the world as a rich landscape of opportunities. By understanding the different growth stories playing out across the globe, you can build a portfolio that's not just more resilient, but potentially much more rewarding.

Frequently Asked Questions (FAQ)

Making better financial decisions is a journey, not a destination. As you move forward, questions will naturally arise. Here are clear, concise answers to the 10 most common questions I hear from people seeking to improve their financial literacy.

1. How often should I review my financial plan?

You should conduct a comprehensive review of your financial plan at least once a year. Additionally, plan to review it after any major life event, such as a marriage, the birth of a child, a significant salary change, or an inheritance. Think of it as recalibrating your GPS after your destination changes.

2. What is the single biggest mistake people make with their money?

The most common and damaging mistake is making decisions based on emotion rather than logic. Panic-selling during a market downturn or buying a speculative asset due to FOMO (Fear Of Missing Out) can destroy years of patient saving. A written financial plan is your best defense against emotional decision-making.

3. How can I start investing if I don't have much money?

You don't need a large sum to start. Many brokerage firms allow you to open an account with as little as $50 or $100 and offer fractional shares, letting you buy a piece of a high-priced stock. The key is consistency. Investing small amounts regularly through a low-cost index fund or ETF is far more powerful over time than waiting until you have a large lump sum.

4. Should I pay off debt or invest my extra cash?

This depends on the interest rate of your debt. A good rule of thumb is to compare the debt's interest rate to the long-term expected return of the stock market (historically 7-10%).

• High-Interest Debt (e.g., Credit Cards at 15%+): Prioritize paying this off. It's a guaranteed, risk-free return.
• Low-Interest Debt (e.g., Mortgages at <6%): It often makes more mathematical sense to invest your extra cash, as your potential investment returns are likely to be higher than your debt's interest cost.

5. What's the difference between a financial advisor and a financial planner?

While the terms are often used interchangeably, a financial planner typically helps you create a comprehensive plan to meet long-term goals (retirement, college savings). A financial advisor can be a broader term, and may focus more specifically on managing your investments. Look for a Certified Financial Planner™ (CFP®) who acts as a fiduciary, meaning they are legally required to act in your best interest.

6. How much should I have in my emergency fund?

The standard recommendation is to have 3 to 6 months' worth of essential living expenses saved in a high-yield savings account. This fund should be liquid and easily accessible. If your income is unstable or you have a high-deductible health plan, aiming for 6 to 9 months is a safer bet.

7. What is rebalancing and why is it important?

Rebalancing is the process of selling some assets and buying others to restore your portfolio to its original target allocation (e.g., 60% stocks, 40% bonds). If stocks have a great year, they might grow to be 70% of your portfolio, making it riskier than you intended. Rebalancing forces you to "sell high and buy low," maintaining your desired risk level.

8. Is it too late for me to start saving for retirement in my 40s or 50s?

No, it is never too late. While starting early is ideal, you can still build a substantial nest egg by being aggressive with your savings. People over 50 can make "catch-up contributions" to their retirement accounts. The most important step is to start now and create a disciplined savings plan.

9. What is the best way to deal with financial information overload?

Focus on timeless principles, not daily headlines. Stick to a few high-quality, reputable sources for financial news and analysis. Unsubscribe from sensationalist newsletters and avoid getting financial advice from social media influencers. Your personal financial plan should be your primary guide, not the noise of the market.

10. How do I protect my finances from inflation?

Inflation erodes the purchasing power of your cash. To combat it, your money needs to grow at a rate higher than inflation. Holding too much cash is a losing strategy. A diversified portfolio of assets like stocks (which represent ownership in businesses that can raise prices), real estate, and inflation-protected bonds (TIPS) are traditional long-term hedges against inflation.

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