July 21, 2021
Inflation can creep up on you and take your money before you know it.
In this article, we’ll be talking about strategies for beating inflation and protecting yourself from its effects. We’ll start by clearing up what inflation is, then talk about the best ways to protect against it (you’ve got options!).
First, what is inflation? Simply put, inflation is the increase of prices over time. This means that if something is worth $100 today, it will probably cost more than $100 dollars in the future. That means the value of your money will probably decrease over time. $1 million may be all you need to live comfortably today, but it may not get you as far as you’d like during retirement if prices continue to rise.
Inflation primarily impacts cash value and money that sits in low interest bank accounts. Since those assets don’t grow at all—or grow very slowly—inflation can torpedo your purchasing power.
The key, then, is to find assets that grow at the same or a faster pace than inflation. That includes things like physical commodities (oil, grain, etc.) and real estate. While they’re not guaranteed to keep up with inflation, they typically increase in value as prices rise.
Investing in the market follows the same logic—the value of stocks typically rises as inflation increases. Again, it’s not a perfect solution, and stock values aren’t guaranteed to rise in value. But they’re options for those seeking to protect their wealth over the long-term from the slow decay from inflation.
Meet with a licensed and qualified financial professional about inflation hedging strategies. They can help you identify vehicles and accounts that may grow at the same (or faster) pace as prices.
Market performance is based on many factors and cannot be predicted. This article is for informational purposes only and is not intended to promote any certain products, plans, or strategies for saving and/or investing that may be available to you. Any examples used in this article are hypothetical. Before investing or enacting a savings or retirement strategy, seek the advice of a licensed and qualified financial professional, accountant, and/or tax expert to discuss your options.