Inflation is usually a retirees worst enemy. While it rarely makes big impacts in any single year, over time even modest inflation results in significant reduction in purchasing power of your savings. Even with just 3% inflation, the value of a dollar will be reduced by more than half over a 30 year period. Inflation is particularly damaging to retirees because they are the ones usually more reliant on fixed income, such as pensions, Social Security, and savings instruments like CDs, bonds, and savings accounts. These assets produce an income stream that has little or no inflation adjustments, meaning that their real value to you declines significantly over time. There are a few things you can do to make sure your retirement portfolio is positioned as well as it can be for handling rising inflation: First, diversify and don’t put all your eggs in one basket. Many retirees thought gold would be a good inflation hedge in the early 1980s, and invested heavily in the precious metal. However, the metal’s price declined more than 80% adjusted for inflation over the next 20 years. What worked better than gold? A diversified basket of stocks had a much higher return and was much less volatile. Next, reduce the duration of your bonds and fixed income investments. Long term bonds, where your money is locked up for 10 years or more, will see much more negative impact from inflation than shorter term bonds. A portfolio of shorter term bonds will also let you invest at higher interest rates more quickly than if you had longer term bonds. Inflation is certainly not a risk to ignore. As fiduciary financial advisors, we can help you create a financial plan and stress test that plan through various scenarios, like rising inflation. For more investing and retirement topics we cover with our clients, visit: ...(read more)
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Inflation is a real and present threat to your investments and retirement. With the current economic climate, it is more important than ever to protect your investments and retirement from rising inflation. Inflation is when the prices of goods and services increase over time. This means that the same amount of money will buy you less in the future than it does today. This is why it is important to protect your investments and retirement from inflation. The first step in protecting your investments and retirement from inflation is to diversify your investments. Diversification helps to spread out your risk and ensure that your investments are not all tied to one sector or asset class. This way, if one sector or asset class suffers from inflation, the others may still be able to provide a return. The second step is to invest in assets that are less likely to be affected by inflation. These include stocks, bonds, and real estate. These assets tend to be more resilient to inflation because their prices can increase as the cost of living rises. The third step is to invest in assets that are designed to protect against inflation. These include Treasury inflation-protected securities (TIPS) and gold. TIPS are bonds that are linked to the Consumer Price Index (CPI). This means that the principal value of the bond will increase with inflation. Gold is also a great option for protecting against inflation because it tends to increase in value as the cost of living rises. Finally, it is important to keep an eye on the economic climate and adjust your investments accordingly. If inflation is on the rise, you may need to adjust your investments to protect your retirement savings. Inflation can be a real threat to your investments and retirement. However, by diversifying your investments, investing in assets that are less likely to be affected by inflation, and investing in assets designed to protect against inflation, you can protect your investments and retirement from rising inflation. https://inflationprotection.org/protecting-your-investments-and-retirement-from-rising-inflation/?feed_id=74586&_unique_id=63fe3545c6934 #Inflation #Retirement #GoldIRA #Wealth #Investing #federalreserve #Fixedincome #Gold #hedgeagainstinflation #inflation #inflationandstockmarket #inflationandstocks #inflationinvesting #inflationinvestingstrategies #inflationprotection #inflationprotectionstrategies #qe #whattoinvestinduringinflation #InvestDuringInflation #federalreserve #Fixedincome #Gold #hedgeagainstinflation #inflation #inflationandstockmarket #inflationandstocks #inflationinvesting #inflationinvestingstrategies #inflationprotection #inflationprotectionstrategies #qe #whattoinvestinduringinflation
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