How the Recent Rise in Inflation is Spurring People to Rethink How They Invest
Inflation – it’s impossible to miss. The Consumer Price Index (CPI) measures the average change in prices paid by urban consumers for a basket of goods, like food, clothing, housing, and transportation. According to the U.S. Bureau of Labor Statistics the CPI rose 8.5 percent over the last twelve months. Basically, everything you buy is more expensive, from gas to food to a night out.
Inflation occurs when there is an imbalance between supply and demand. If supply chains are disrupted because of war, natural disaster, or a pandemic, companies often raise prices because they expect that demand will outpace their available supply. The inflation we’ve seen in the last year is the result of these market forces, as well as a myriad of contributing factors. Learn more about the causes of inflation here.
Investors have been consistently taught to fear inflation, with Warren Buffett famously calling inflation “a gigantic corporate tapeworm” that takes its share of capital off the top regardless of whether the company is profitable or not. When it comes to periods of high inflation, people should be cognizant of the effect inflation has not only on their investments, but also on the money they have sitting in cash.
Financial advisors at the investment firm One Day In July recommend using equity exposure in your portfolio to capture some benefit of rising prices. When done in conjunction with an appropriate bond allocation, this can help protect your portfolio from inflation. Inflation is expensive. Now may be a good time to take a look at your investments and see if you could be saving more. Many people tout the old adage “stay the course” when the markets are volatile or inflation is on the rise. Staying the course through volatile markets is a great plan – as long as you are on the right course. There are numerous factors affecting investment portfolios right now. A knowledgeable advisor can help make sure you are headed in the right direction.
Financial advisors at One Day In July recommend making sure that you are working with someone who is a fiduciary on all of your accounts. When a financial advisor acts as a fiduciary it means that they must put your interest first throughout the duration of your relationship. The financial industry is complicated, and it can be hard to tell what distinguishes an advisor who is acting as a fiduciary from one who is not. Take a look at this article to better understand the distinct – and important – factors that differentiate advisors.
One Day In July is a Vermont-based investment firm that services clients across the country. By using index funds, always acting as fiduciaries, and charging low fees, the financial advisors at One Day In July seek to change the state of investment management across the industry. People today are bombarded with information about inflation, interest rate hikes, supply chain problems, and environmental catastrophes. One Day In July advisors want to provide you realistic ways to deal with the fallout of these events so that your long-term financial goals stay intact. You can schedule a free consultation by visiting www.onedayinjuly.com or by calling (802) 503-8280.