The annual inflation rate in the US rose to 8.5%, which is four decades high, new consumer price index data revealed. Inflation has not been so high since the early 1980s, as prices of groceries, including gas, housing and food, have been rising. So we asked financial advisers: What do you do with your own money to fight inflation? (You can use this tool to be matched with a financial advisor who meets your needs.)
Dividend growth stocks from quality companies – Leslie Thompson, Investment Manager at Spectrum Wealth Management
“To combat the impact of inflation on my future purchasing power, I invest in dividend growth stocks with a focus on quality companies with competitive brand positioning, solid balance sheet and growth in cash flows and earnings – which is different from investing in a stock with the highest dividend. Some stocks may not have a meaningful return today, but the company has the will and ability to grow dividends over the long term. the share price as well as the cash flow growth through an increasing dividend flow, ”says certified financial planner Thompson, who emphasizes that in his case he has” at least 10 years before I need access to my investment portfolio. “
Equities and Real Estate – Andrew Ross, Private Wealth Advisor at Integrated Partners
“I have a long time horizon, so I am primarily invested in equities to fight inflation. If they have had enough time, equities have historically surpassed inflation by a wide margin, ”says Ross, who is also a chartered financial advisor and a certified plan-fiduciary advisor. “To take this further, as a long-term investor, I see 10%, 15%, 30% declines in the market as opportunities for me to buy shares in large companies at a discount.”
“I also believe that real estate is a critical part of a well-diversified portfolio, and it is also a major fighter against inflation. My primary home has increased in value, and my rental home has not only increased in value, but our rental income has increased every two to three years, ”says Ross. (You can use this tool to be matched with a financial advisor who meets your needs.)
Agricultural Investment and Real Estate – Tatiana Tsoir, Certified Public Accountant and Author of Dream bold, start smart
Real estate is a good investment under inflation, says Tsoir, who adds that she owns “a few rental properties along with our primary home.” And she adds: “Skyrocketing gas prices along with inflation have made us think about acquiring agricultural land and other agricultural investments.”
A diversified equity portfolio and very short-term cash – Kyle McBrien, Certified Financial Planner at Betterment
“For the money I’ll need for the next few months, I’ll keep them in cash because I know pretty much how much I need and when I’ll need them. Yes, it’s possible I could lose something. purchasing power due to inflation, but the alternative choice is to invest my funds to keep up with inflation.In that alternative, I risk losing money on market volatility, which we have seen a lot of lately.The disadvantage of short-term volatility in the market is probably greater than the downside of short-term inflation, so I choose to keep my short-term funds out of the market, ”says McBrien.
For money that McBrien needs in the long run, he does not change anything and he remains aggressive given his long time horizon. “Equities have historically been a strong long-term hedge against inflation, so I keep my long-term investments in a diversified equity portfolio,” says McBrien.
Private Debt and Luxury Watches – Michelle Connell, Chartered Financial Analyst and President of Portia Capital Management
“To avoid further inflation / interest rate risk, I sold my bonds with maturities of three years or more, and just as I did for my clients, I invested the proceeds in senior secured private debt with maturities of two years or less, which have variable interest rates. The current return is almost 6%, and this interval debt can be settled quarterly, ”says Connell.
What’s more, Connell says she considers herself a horologist (someone who collects watches). “Luxury watches have risen over 60% in the last decade and the trend is expected to continue as luxury watches are seen as a means of storing wealth. Even cryptomillionaires have exchanged some profits for luxury watches, ”says Connell. (You can use this tool to be matched with a financial advisor who meets your needs.)