Strategies for Investing in an Inflationary Environment

Everyone probably heard about inflation in the news and experienced it firsthand. For some, they notice it when purchasing items at the grocery store, others notice it at the gas pump. In all our purchasing activities the latest inflation surge appears to be evident. 

 

Historically, a two percent inflation rate has been considered a healthy indicator of a growing economy. The consumer price index for May, which tracks changes in the price of food, housing, gas, and other commodities over the previous twelve months, increased by 8.6%, reaching a 40-year high.

 

Higher costs on goods and services mean that consumers have less purchasing power if their income does not keep up with inflation. Rapid price increases might cause economic instability and risk many individual's savings accounts just to live their day to day lives. Consumers' agony is amplified by the fact that they don't know how long or how to react financially if prices continue to rise.  

 

A rise in inflation has a negative impact on the returns of investors who rely on bonds for their income. Additionally, inflation can erode an investor's purchasing power and reduce their returns if they don't manage the impact on their portfolios. 

 

In this episode, we discuss how to manage your finances and what are the best investment options during a high period of inflation.  Join our hosts, wealth manager Lee Michael Murphy and career advisor Sergio Patterson. Tune in to this week’s episode of The Free Retiree Show.

 

What you’ll learn in this episode: 

 

• What is the difference between the current market and past bear markets 
• Recommended investments strategies to combat the inflation surge
• How to beat inflation 

What needs to happen for the market to recover