How Do I Invest with High Inflation?

Inflation currently sits at just over 8%. Portfolios everywhere have taken it on the chin in this current economic environment.

The Federal Reserve is raising rates at the fastest pace since the 1980s. The UK is sending contradictory messages through its own rate increases while its government has just rolled back a stimulus policy it implemented a week prior.

So how does this all effect you?

Take Stock

First things first you need to take a step back and evaluate your plan. Has anything changed as a result of this market pull back?

If something has changed, maybe you lost your job or higher than expected spending is leading you to not save as much, how does it affect your financial plan.

If it feels like you need a change to be made contact your financial advisor or let me see how I can help.

What’s Next

We know that when the market pulls back like it has this year, we typically are not far off from the next bull market.

This is why I preach to clients not to panic. This is the perfect time to stay the course. If you have money on the sidelines, consider putting it to work in the market. But don’t just invest for the sake of investing, really consider your plan.

Things to Consider

With the beating that stocks have taken this year investors with a long-term time horizon have the chance to capitalize big time. When a market sells off like we have seen so far this year, expected returns rise.

But what if you don’t have a long time?

The bond space is becoming more attractive over the long haul as well. Bonds that were paying less than 3% last year are moving closer to 5% now.

Consider whether you should invest in bonds to meet short-term liquidity needs moving forward. With the long-term outlook brightening this could be a great opportunity to take risk out of your portfolio and guarantee more stable cash flow.

The Final Word

Given what is happening in the market today it is likely you could tweak your portfolio to better situate yourself for the future. This could mean taking money not yet invested and putting it into the market or taking some long-term risk off the table and finding more consistent income streams through bonds.

What are you doing to help your portfolio?