But many experts predict higher prices will stick around throughout 2022, contributing to a year of volatile markets. And that, of course, is making people a bit nervous. 

Only about 40% of Americans say they’re confident in the U.S. economy, down from 69% before the pandemic, according to the 2022 Wealth & Wellness Index report released by Personal Capital. 

But how do all these moving parts affect the average American’s investments and retirement savings? Seven financial planners tell Fortune that these are steps people can take to mitigate the effects of inflation on their investments. 

Review your investments

It’s always a good idea to periodically review your investments and financial goals, but in the current environment, it’s worth doing that sooner rather than later. If you work with a financial adviser, have them rerun any goal projections using a higher inflation rate. Most models, for instance, assume a 3% inflation rate, which may be too low if you’re planning to retire in the next few years. 

“Generally, clients should have a portfolio that can withstand some inflation,” says Seth Mullikin, a CFP and founder of North Carolina–based Lattice Financial. If that’s the case, there may not be a lot you need to change. But investors who have portfolios that are primarily invested in fixed income for safety may want to reevaluate, Mullikin says. 

Most likely this may mean making small adjustments to the overall asset allocation to ensure that the returns are outpacing inflation. 

Don’t ditch your stocks 

Stocks, historically, have been a good hedge against inflation, some sectors more so than others, so financial planners advise against getting rid of stocks or equity-based funds. 

These investments can actually help reduce the effect of inflation. “Historically speaking, owning a healthy dose of strong stocks has afforded perhaps the best protection against inflation,” says Greg Giardino, a CFP with J.M. Franklin & Company in New York. John Scherer, a financial planner and founder of Wisconsin-based Trinity Financial Planning, recommends investing in stock mutual funds. 

“Companies are best positioned to adjust to inflation,” he says. Investing in company stocks makes sense then because most of the time, they can pass along the cost increases to consumers and keep their profit margins intact and their share prices up. “So investing in businesses, diversified by using stock mutual funds, is a great inflation hedge,” says Scherer.

“The reality is that clients may need to get comfortable owning more stock than they would like,” says Alec Quaid, a CFP with Colorado-based American Portfolios Denver. A portion of the portfolio needs to be invested in equities to beat inflation. 

“It’s important to remember that there are two ways to lose money: your $1 decreases to 90 cents or your $1 only buys 90 cents’ worth of goods in the future,” he says. 

Carefully weigh bond investments

Bonds diversify and balance a portfolio but typically deliver lower yields. Most investors consider them a safer bet, especially those closer to retirement who don’t want to jeopardize their savings when they’re close to the finish line. 

For people who are particularly concerned about inflation, and who are nearing (or already in) retirement, Giardino says Treasury Inflation-Protected Securities (TIPS) can be a prudent investment for short-term or intermediate-term money. 

These bonds are structured so that as inflation increases, the principal value of the bond will increase in value, Giardino says. However, it’s worth noting that TIPS can be more expensive than your average bond because they do offer some inflation protection, so it’s worth carefully considering whether this type of investment matches your situation and investment goals.

Skip the cash and diversify your investments 

If any asset class is most vulnerable in periods of rising inflation, it’s plain cash, says Jon Ulin, a CFP and founder of Florida-based Ulin & Co. Wealth Management. 

“Rising prices erode the value of cash holdings, underscoring the importance of investing in appropriately diversified portfolios whether you are retired or not,” Ulin says. For example, he calculates that the cost of holding $250,000 in cash would amount to a $17,500 loss in purchasing power a year considering a 7% inflation rate.

“For investors, it continues to be important to stay diversified and to hold assets that can adapt to evolving inflationary environments, Ulin says. Many asset classes that investors already own have these properties, including stocks, commodities, and real estate. Ulin says he’s already deployed anti-inflation and interest rate buffers in his clients’ strategic diversified portfolios that include investing in taxable and municipal TIPS, floating rate bonds, and floating preferred stock ETFs, as well as commodity, oil, financials, industrials, and REIT sectors. 

It may also be worth adding more alternatives to your portfolio, says Ashton Lawrence, a CFP with Goldfinch Wealth Management in South Carolina. “Private equity and private credit are now interesting options that investors can add to their portfolio for additional diversification,” he says. He added that structured notes and buffered ETFs are also options that people can consider if they’re worried about markets plummeting, but still want to have the ability to capture some of the returns if markets perform at better-than-expected rates. 

In addition to making investment shifts, consumers should also be looking at their income and spending, says Marco Rimassa, a CFP and founder of Texas-based CFE Financial. That includes making broader financial moves like looking for ways to make more money, if possible, and keeping costs in line, such as making substitutions for cheaper options at the grocery store and actively searching out the best prices.

“Investors should be playing active defense against high inflation in other areas of their financial lives,” Rimassa says.