Inflation can be frustrating, yet it’s a reality that consumers, investors, and Americans in general need to accept—it’s here to stay. It’s crucial to recognize that fluctuations in inflation don’t directly measure the cost of goods or services; instead, they reflect changes in these costs. Understanding this principle is essential for shaping your mindset.
To keep pace with the rising cost of living in America, investing your money and earning a return on it is the only viable strategy. This encompasses various approaches, including but not limited to:
- Invest Wisely: Diversify your investments across different asset classes such as stocks, bonds, real estate, and commodities. This helps spread risk and can provide a hedge against inflation. Talk to us to learn more about “proper diversification” here.
- Stock Market Participation: Historically, stocks have outpaced both inflation and bonds (fixed-income). Consider investing in well-established companies with a history of growth.
- Real Assets and Real Estate: Invest in tangible assets like real estate or commodities (e.g., precious metals) as they can retain value during inflationary periods. They also provide the opportunity for non-correlation to your stock and bond portfolio.
- Placing Your Money in High-Interest Accounts: Liquidity is an important factor for our money, we get that, but letting tens of thousands of dollars sit in your checking account is not ideal in an inflationary environment.
- Update Your Budget Regularly: Keep a close eye on your budget and adjust it periodically to account for rising prices. This helps maintain control over your expenses.
- Acquire Skills and Education: Invest in your skills and education to enhance your employability and earning potential. This can help you keep up with the changing job market and rising costs.
- Generate Additional Income Streams: Explore side hustles or passive income sources to supplement your primary income. This diversification can act as a buffer against inflation.
- Negotiate Salary and Benefits: Regularly assess your compensation package and negotiate for increases that at least match the inflation rate. This ensures your income keeps pace with rising costs.
- Monitor Interest Rates: Keep an eye on interest rates and adjust your financial strategy accordingly. Higher interest rates may offer better returns on certain investments.
The above lists are not a recommendation but serve to be educational. If you would like to have a further, detailed conversation, please call us or email us today.
Chapwood Investments, LLC is an SEC Registered Investment Advisory Firm (SEC.gov). No mention, opinion, or omission of a particular security, index, derivative, or other instrument in this webcast or video constitutes an opinion on suitability of any security. The information and data in this video were obtained from sources deemed reliable. Their accuracy and completeness are not guaranteed. At any given time, principals at Chapwood Investments, LLC may or may not have a financial interest in any or all of the securities or instruments discussed in this webcast or video. The guests appearing on videos do not receive compensation or provide endorsements or testimonials. Past performance is not indicative of any future results.