How to protect yourself from inflation

Last year we had inflation above 10%. This year, the expectation is also of high inflation. Although this subject is quite complex, there are some guiding principles for you to protect yourself from inflation in your investments. First, avoid pre-fixed fixed income securities. The interest on these bonds includes a fixed rate of inflation expected by the market for the term of the bond. If inflation exceeds this expectation, it will erode the portion of interest corresponding to its real return. If you want to invest in fixed income, you can buy post-fixed bonds, which follow the basic interest rate, which is often adjusted for inflation; and you can also buy hybrid bonds, where part of the interest rate is fixed and part of it is indexed to inflation. Investing in these types of bonds is the easiest way to have reasonable protection in inflationary environments. The alternative to this is to invest in assets that are essential to people. These assets will always maintain their value, regardless of monetary inflation. However, these are investments that demand more knowledge and dedication of time to analyses. In our stock fund, one of the criteria we evaluate is the power each business has to pass on prices, which allows the company to protect itself in inflationary environments and indicates how essential the product or service offered is, which also ends up making the future of these deals more predictable.