What To Do When Familiar Portfolio Security Stops Working

Some investors rely on misguided or outdated methods of building portfolio “security”:  

• Holding cash to time the market. 
• Relying on bonds and certificates of deposit for stability.  
• Assuming gold is an inflation hedge. 
• Sticking only to investments that have performed well in the past (even if the economy and market have changed). 

People trust these pillars because they are familiar and feel secure. But failing to adapt your portfolio and lean into a healthy amount of risk can harm you in the long run.  

While we anticipate a relatively calm inflationary environment in 2026, inflation can subtly persist, and relying on familiar sources of portfolio security can upset your returns. What should a wise investor do instead to manage even mild inflation?

Unlike at Credent, many portfolios are built based on what worked in the past. But inflation changes the rules in ways that aren’t always obvious. 

When prices rise, it costs more to borrow money, future profits become less certain, and fixed-income payments lose purchasing power over time. Investments that once felt safe may not hold up as well, especially when inflation sticks around longer than expected. 

This doesn’t mean everything loses value at once. Instead, some investments hold up better than others, creating a wider gap between winners and losers. 

During inflation, investments don’t all react the same way. Some adjust well, while others fall behind — even if they used to move together in more predictable ways. 

This catches many investors off guard. Two people with similar portfolios and the same long-term goals can end up with very different results. The difference comes down to how each investment responds to rising prices. 

What might seem like a random divergence is actually a reminder that how your portfolio is built matters most when conditions shift. 

You don’t need to abandon your long-term plan or constantly react to market changes. But it’s worth reconsidering what “safe” really means. Some investments that felt secure in the past may not hold up as well during inflation, even if the risk isn’t obvious at first glance. 

By looking at the evidence, you can see that things like cash, bonds, CDs, and gold aren’t always reliable, especially when inflation is involved. For example, over the last two decades, 12-month CDs ultimately lost money 75% of the time.¹ 

Certain investments do better when prices rise because they can raise their own prices or their income adjusts with inflation. Others struggle because they depend on fixed payments or growth that won’t happen for years. These differences matter much more during inflationary times. 

The key is knowing which types of investments tend to hold up, and which old assumptions may no longer be true. 

When it comes to investing during inflation, the goal is to understand the risks you’re taking with greater clarity. 

Portfolios built with flexibility in mind tend to adapt more effectively when inflation lasts. This means spreading investments across different asset types, structures, and time frames to help navigate changing conditions. 

In our recent article, we explored whether waiting to invest is really a neutral choice. A natural next question is: Are the assumptions behind your portfolio still working the way you expect? 

The answer isn’t always obvious, which is why it’s valuable to step back and see the bigger picture.  

Credent’s Investment Management Team reviews and adjusts clients’ investments to create portfolio security for the current economic background. In addition, your Credent advisor can help you evaluate how your portfolio is positioned for today’s environment and identify adjustments that align with your goals. If you have questions about inflation’s impact on your plan, we’re here to provide answers.  

To talk to your advisor about your portfolio security, reach out using the form below.