Inflation Is Climbing: Here’s Where I’d Put $10,000 Right Now

Inflation can change the whole mood of a portfolio. When prices climb, investors often rush toward whatever looks safest. Cash feels comfortable, dividend stocks look tempting, and gold gets attention.

But for a Tax-Free Savings Account (TFSA), I’d rather look for a business that can compound through inflation, not just hide from it. That’s why Fairfax Financial Holdings (TSX:FFH) stands out as a smart place to consider putting $10,000 right now.

FFH

Fairfax stock isn’t a typical blue-chip stock. It’s a property and casualty insurance and investment holding company. In short, it collects insurance premiums, pays claims, and invests the money before claims come due. That structure can work well when management allocates capital wisely. Fairfax stock has done that for decades under Prem Watsa, often compared to a Canadian version of Warren Buffett because of his long-term, value-focused approach.

So, how does inflation tie in? Canada’s annual inflation rate rose to 2.8% in April, up from 2.4% in March. That doesn’t mean investors should panic, but it does remind everyone that sticky prices can pressure households, borrowing costs, and corporate margins. Companies with weak pricing power can struggle. Fairfax stock sits in a better position because insurance pricing can adjust over time, and its large investment portfolio can benefit from higher interest income.

Into earnings

The latest quarter showed why investors still take this business seriously. In the first quarter of 2026, Fairfax stock reported net earnings of US$695.7 million, or US$31.11 per diluted share. Book value per basic share reached US$1,250.14 at the end of March. The company also reported underwriting profit of US$381.6 million from its property and casualty insurance and reinsurance operations, up sharply from US$96.9 million a year earlier.

That underwriting profit shows Fairfax stock’s insurance businesses made money before investment returns. When an insurer can earn underwriting profit and then invest the float, shareholders get two engines working together. That’s a powerful setup during uncertain markets.

Fairfax also has scale. The company says it has about US$24 billion in annual gross premiums written and US$87 billion in total assets. It also reports an 18.9% compound annual growth rate (CAGR) in book value per share since 1985. Investors shouldn’t expect that exact pace forever. Still, that record explains why the stock often earns a serious look when markets get nervous.

What to watch

Valuation helps the case. Fairfax stock recently traded around 7.8 times trailing earnings and about 1.2 times book value. That doesn’t look expensive for a company with this kind of compounding record. The stock has already climbed a lot, so it’s not some forgotten bargain. Yet compared with many high-growth stocks, Fairfax stock still looks reasonably priced. It also trades on a different rhythm than many Canadian stocks. Insurance results, bond income, and investment gains can offset weakness elsewhere. That mix can help when inflation makes the market feel uneven right now.

What would $10,000 do here? At a recent price near $2,170, it would buy about four shares, with a little cash left over. The dividend won’t drive the thesis, as Fairfax stock pays an annual dividend of $20.77 per share at writing, so investors buying today should focus more on long-term capital growth than income. Even so, should we see the same growth as last year, here’s what just four shares could do.

COMPANYSHARESPRICE TODAY1-YEAR RETURN LAST YEARESTIMATED PRICE IN 1 YEARTOTAL VALUE TODAYESTIMATED TOTAL VALUE IN 1 YEARFFH4$2,174.284.36%$2,269.08$8,697.12$9,076.31

Bottom line

Risks still count. Fairfax stock can face catastrophic losses, weaker investment returns, currency swings, and insurance cycle pressure. A major storm season or market shock could hit results. The stock also depends heavily on management’s capital decisions. That deserves respect, not blind faith.

Even so, Fairfax stock looks like the kind I’d want in a TFSA when inflation climbs. It has pricing flexibility, investment income potential, strong underwriting momentum, and a long record of building book value. I wouldn’t put every dollar into one company, but pair it with cash and a dividend stock for balance. Yet if I had $10,000 to invest today, Fairfax stock would sit near the top of my list for years to come.

The post Inflation Is Climbing: Here’s Where I’d Put $10,000 Right Now appeared first on The Motley Fool Canada.

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Fool contributor Amy Legate-Wolfe has positions in Fairfax Financial. The Motley Fool has positions in and recommends Fairfax Financial. The Motley Fool has a disclosure policy.