In 2025, many investors are still navigating a market environment shaped by inflation, elevated interest rates, global conflict, and an uncertain geopolitical landscape. After several years of economic shocks—from pandemic-driven disruptions to central bank tightening cycles—the question remains: what’s the smartest move when the future still feels so unpredictable?

Big picture: we’re sticking with the core principles we’ve always used to help clients invest across time and through changing conditions. These include:

• Building and maintaining personalized portfolios of stocks, bonds, alternatives, and cash reserves
• Minimizing concentrated risk through global diversification
• Managing emotional reactions to unfolding news (like fear or FOMO)
• Keeping tax implications and other costs in view

These timeless tenets are especially valuable during times of uncertainty, helping you stay focused and grounded when headlines stir doubt.

Future Uncertainty: The Only Constant

Whether we’re looking at war in Ukraine, elections in the U.S., China’s shifting economy, or inflation trends, one truth remains: the future is always hard to predict.

That’s why we take most market forecasts with a grain of salt. The loudest voices in the media often aren’t the most accurate—they’re just the most attention-grabbing. As Wharton Professor Phil Tetlock noted in his research on expert predictions:

“There is a bit of a perverse inverse relationship between having the skills that go into being a good forecaster and having the skills that go into being an effective media presence.”

In other words, the better the soundbite, the less reliable the forecast may be.

Historical Lessons to Keep in Mind

Looking back at past data helps us understand just how unpredictable market reactions can be. Here are a few insights worth remembering:

• Inflation doesn’t doom long-term returns. In a 2021 analysis of U.S. inflation and global asset returns, Dimensional Fund Advisors found that most asset classes had positive real returns in both high- and low-inflation years.
• Rising rates don’t always hurt bonds. DFA’s study of bond returns from 1984–2021 showed no consistent link between rate hikes and bond underperformance.
• Markets often defy expectations. In 2017–2018, when rate hikes were widely anticipated, long-term Treasury bonds still outperformed shorter-term ones—despite conventional wisdom suggesting otherwise.
• Timing factor investing by the economy? Still not reliable. Evidence shows that trying to shift investment strategies based on where we are in the business cycle often leads to poorer results.
• Geopolitical chaos doesn’t equal predictability. From wars to elections, financial markets behave like complex adaptive systems. Even small disruptions can lead to wildly different outcomes—making long-term planning more effective than short-term speculation.

So What Should You Do?

Well-structured, globally diversified portfolios remain one of your best defenses against uncertainty. While no strategy guarantees success, sticking to a long-term plan gives you the best chance of weathering volatility and participating in future growth.

Two main strategies help us navigate inflation and rate-related risk:

1. Hedging Against Inflation

When planning for near-term expenses—like retirement withdrawals—it helps to include assets that move with inflation. This might mean holding:

• Treasury Inflation-Protected Securities (TIPS) to preserve purchasing power
• A mix of short- and long-term bonds to balance interest rate sensitivity

We don’t recommend overweighting volatile assets like gold or energy stocks for inflation protection. These are already part of a diversified portfolio and often carry excess risk.

2. Outpacing Inflation

Longer-term goals (like building wealth or legacy planning) require investments that are expected to outpace inflation over time. That means:

• Stocks – especially those tilted toward value and small-cap factors, which have historically delivered higher returns
• High-quality bonds – offering the best yield relative to risk
• Select alternatives – like real estate, reinsurance, or natural resources, which can offer diversification and long-term return potential

It’s not about chasing trends—it’s about staying invested in a way that matches your goals and timeline.

Planning Around Inflation in Real Life

Beyond investing, you can also protect against inflation by:

• Using conservative inflation assumptions in your financial plan
• Delaying Social Security to maximize inflation-adjusted payouts
• Periodically reviewing your spending, savings, and goals with a professional

Final Thoughts: Principles Over Predictions

This article wraps up our series on inflation, interest rates, and your investments. We’ve covered a lot, but the main idea is simple: successful investing isn’t about predicting the next move—it’s about preparing for what’s possible.

The most important strategy you can follow is one that’s tailored to your personal goals, not headlines. If you have questions or want a second opinion on your plan, we’re here for that.

At Navalign Wealth Partners, we’re here to help you cut through the noise and build a financial plan that’s tailored to your life. Ready to take the next step? Give us a call to start the conversation.