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Is Your Portfolio Ready for Inflation?

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When rising prices start affecting your budget, you might be tempted to take another look at your day-to-day expenses. But inflation can also affect how you save and invest for the future—are you prepared?

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Inflation’s Effects

Before the recent spike, inflation had previously averaged around 2% a year for the past decade. But with the rate now above 6%,* inflation will cut into the future purchasing power of your savings. You’ll also need to account for real returns, that is, your investment returns adjusted for the higher rate of inflation, to ensure you can still meet your investment goals.

Your Inflation Goal

You’ll need to evaluate your current portfolio plan to determine your next steps. Will you try to break even so the inflation rate doesn’t cut into your returns? Do you need a certain amount of income? Do you already have inflation hedges built into your portfolio?

Answer a few questions to help focus your inflation efforts.

What’s Your Investing Time Frame?

Source: American Century Investments. The examples indicate general inflation scenarios and do not account for your individual circumstances.

What’s Your Stock/Bond Investment Mix?
Don’t see a good representation of your portfolio?

Let’s talk about what inflation could mean for your situation. Call us.

What’s Your General Plan to Handle Inflation?

Not sure of your next steps?

Learn more about inflation strategies, or talk through your options with us.

Source: U.S. Bureau of Labor Statistics. Data as of February 14, 2023.

Generally, as interest rates rise, the value of the securities held in the fund will decline. The opposite is true when interest rates decline.

Diversification does not assure a profit nor does it protect against loss of principal.

Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.

This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.