It is difficult to miss recent inflation rates numbers, and perhaps even more so, the fear and concern that inflation will likely stay much longer than the Federal Reserve and wealthy investors would like. If you have purchased gas, perfume, groceries, or a car, lately, you may have noticed that things are getting more expensive. Did you know that in March, inflation reached about 8.5%, representing the most significant year-over-year jump in more than four decades?
Investing is not without its worries and uncertainties for affluent investors. Although it is great to have a strong asset base, managing it often comes with a new set of stresses, such as inflation and market fluctuations. As an accredited investor or someone who follows stocks, you definitely hear about inflation in the billionaire investor talking points. There is no doubt that inflation is a significant factor affecting long-term portfolios, and affluent investors face a few crucial challenges in planning for it.
The Surge in Inflation and Savings
The recent surge in inflation means it is more important than ever before to ensure your wealth and savings are not being eroded by increasing prices. Inflation is usually the result of an imbalance in demand or supply. Inflation is a slow and gradual erosion of your money and wealth over time. Before 2021, the US hadn’t seen yearly core inflation rates much above 3% for almost 25 years; however, now, things are different. What makes this inflation period somewhat unique, however, is that the US economy is experiencing pressure from both supply and demand sides.
Tips to Protect Your Wealth Against Inflation
With prices increasing at a record pace, use these tips to protect your wealth from the eroding impact of inflation.
Identify Stocks that will Benefit from a High Inflation Rate
According to investment advisors, banking, consumer staples, utility, energy, and healthcare equities are likely to do well. You should consider these stocks to minimize the impact of inflation. With any diversified and balanced investment portfolio, keeping suitable inflation-hedged asset groups on your watch list and making the purchase decision when you see inflation will help your portfolio grow when inflation increases.
You may know that companies and businesses that produce essential consumer goods are usually able to pass on their higher costs to final consumers. In contrast, housing and automotive companies in the US will get stung by increasing interest rates that increase borrowing costs for customers. And this may make them riskier investments.
Seek Expert Financial Advice
A sensible and prudent investment strategy should entail holding a wide variety of assets, such as bonds and mutual funds, and using tax-efficient investment vehicles. Understanding what’s right for you is not always straightforward – and that is where getting some smart advice will help.
Invest in Property Assets
Due to infrastructure improvements and other complications, purchasing real estate is not for everyone. Property is still a fantastic inflation hedge, though. By purchasing a piece of real estate, like a house, you can add another source of income, buy to rent, and keep up with inflation.
Be Proactive Rather than Reactive About Inflation
There is no doubt that, like economic recessions and sudden market drops, inflation is another crucial risk that investors and wealthy individuals need to plan for. If you create an investment mix that considers your risk tolerance, the time horizon for investing, and financial situation, it will help you weather the storms that might crop up along the way. While you may not be able to eliminate the effects of inflation, taking prudent steps to protect your portfolio and wealth from it will help mitigate some of its impacts.
About Salish Wealth Management
comprehensive financial services with a personalized, one-on-one approach. Combining disciplined investment strategies with a high-touch, customized approach, we build financial plans that help our clients pursue their goals.
We specialize in serving individuals and families, many of whom are in retirement. They’ve accumulated their wealth by long-term savings habits and strong investment strategies and seek a full-service firm and financial advisor who can supply them objective advice and keep a watchful eye over their assets so they can focus on their passions in life.
We believe clients choose us because we fulfill this need. Many of our clients tell us they know we make decisions with their needs in mind. We prioritize honest and open communication and supply them the resources they need to plan for and address every aspect of their financial life.
Salish Wealth Management
2122 Barkley Blvd Suite 200
Bellingham, WA 98226
360-594-5365
Serving Whatcom County, San Juan County, & Skagit County
Disclosure
Securities offered through Moloney Securities Co., Inc., Registered Broker/Dealer, Member FINRA/SIPC. Investment Advisory Services offered through Moloney Securities Asset Management, LLC, Registered Investment Adviser. Moloney Securities Co., Inc. and Moloney Securities Asset Management, LLC are not under common control or ownership with Salish Wealth Management.