Many customers wonder how to keep rising prices from severely affecting their savings and spending habits as inflation rates soar to levels not seen in decades. While the increase in pricing for goods and services in recent months has been attributed to the world opening up again, we don’t know how long it will persist or how we should react economically.
Inflation and the increasing consumer demand
For the past few months, prices for consumer goods and services such as food, electricity, and housing have risen. According to the most recent consumer price index statistics released Friday, they increased by 6.8% over the previous year in November.
Along with rising prices this year, there have also been supply-chain bottlenecks and increasing consumer demand. These can cause real challenges as the average American’s purchasing power degrades over time. While the effects of inflation are not easily avoided, several financial planners tell Fortune that consumers can take steps to duck the worst consequences.
Best ways to do during inflation
Many experts get their thoughts on protecting your money from growing inflation. Here are eight areas where you may put your cash right now. Treasury Inflation-Protected Securities (TIPS) is a really basic concept, despite the fact that the word may appear to be a mouthful.
TIPS, which are indexed to inflation, can help balance out your fixed income or bond portfolio, according to Diahann Lassus, a CFP and managing principal of Peapack Private Wealth Management, CNBC posted.
According to Arnott, cash is frequently neglected as an inflation buffer. Cash isn’t a growth asset, but it will usually keep up with inflation in nominal terms if rising short-term interest rates accompany inflation, Arnott adds.
Keeping money in a CD or savings account is similar to investing in short-term bonds. Your money is safe and easy to get to. In addition, short-term bonds will perform better than long-term bonds if inflation rises and interest rates rise. As a result, Lassus advises sticking to short- to intermediate-term bonds and avoiding anything long-term focused.
Stocks can be a good long-term inflation hedge, but they can suffer short-term if inflation rises. It’s easier than ever to get started in the world of investing if you’re new to it. You’ll need to open an account with a brokerage or trading platform to do so. To uncover the finest solutions for beginning investors, look at more than a dozen internet brokers that provide zero-commission trading.
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