Inflation: What should I do about it?
Tuesday, June 1, 2021
Most people who are already retired know there are two perils that put their fixed income in danger: taxes and inflation. Both issues are out of their control.
Inflation is the rise in cost of goods and services that we use daily. It has been the topic of just about every business network on cable TV lately, and people are getting more concerned as it feels like the federal government is not looking at slowing spending anytime soon.
No doubt we have been experiencing very high levels of inflation in the last few months, and with supply (the lack of) and demand (consumer still wanting product) still being an issue, it might be some time before inflation calms down.
The Federal Reserve has always been the entity people turned to when inflation was an issue.
Chairman Jerome Powell has commented that the Fed is letting inflation “run hot” for awhile in anticipation of supply issues being resolved. One common tool the Fed has at its disposal is higher interest rates.
Regardless of what the Fed does, there are ways you can protect your finances in high inflation times.
Generally, inflation hits certain products more than others, but on products where prices are disproportionally higher maybe consider alternatives. For example, consider generics over name brands. Other options are using coupons, buying used goods instead of new and, as always, keeping within a budget.
Gasoline has been one of the leaders in inflation lately. So driving less and buying a car with better gas mileage could be great for not only short-term solutions but the long term as well.
High levels of extended inflation and rising interest rates could mean a dip in the stock market. So be sure to have some extra cash available to buy the next dip, but don’t make big changes to an already good investment strategy!
Advisory services are offered through Innovative Financial Planners, LLC, an Investment Advisor in the state of Missouri. Insurance products and services are offered through Innovative Insurance Consultants, LLC, an affiliated company.
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