Practical Ways to Hedge Against Inflation

Practical Ways to Hedge Against Inflation

Hedge against inflation in 2021: Here are some practical ways of doing so and how to do it. 

Inflation is out of your control but it doesn’t have to catch you flat-footed. Today we are talking about practical ways you can prepare for high inflation. Stay tuned.

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SPEAKERS

Anthony Saffer VP / Financial Advisor CFP®, CKA®,

Alex Okugawa  / Financial Advisor CFP®, CKA®, CEPA® 

Anthony Saffer 0:00
Inflation is out of your control, but it doesn’t have to catch you flat footed. Today we’re going to talk about practical ways you can prepare for higher inflation. Alex, inflation has picked up over the past several months economists are arguing is it transitory is going to go away? Or is it here to stay? But there are certain things that we can be doing to prepare for higher inflation. Absolutely. So let’s talk about number one. We talked about getting your finances in order.

Alex Okugawa 0:23
Yeah, sure. So really, at a basic level, to your point, you want to get your house household finances in order. And that can be things like, if you have any consumer debt, this would be things like credit cards, you want to make sure you get those paid off. If prices do go up in the short term, or even in the long term. You don’t want to be caught with #1 Credit card debt, and then #2 Rising prices, which then causes you go to go into more credit card debt along the way.

Anthony Saffer 0:47
Yeah, and a lot of credit cards and things like that they have variable interest rates, yep. Often interest rates come up when inflation goes up. And so you just end up with this hype, hype solution. Alright, number two, don’t make drastic changes to your investment portfolio.

Alex Okugawa 1:01
Exactly. And so this is what happens, a lot of people will see the news headlines, they see things in the paper, or they hear about it from friends. And so they start to get a little bit worried, right? Because they want to make these big changes to their portfolio lower saying is, let’s take a pause. And let’s actually see what’s going on. Because you probably don’t need to make big drastic changes. That’s usually the one of the worst things you can do. But think very strategically about your portfolio, you know, do I need to incorporate things like maybe some commodities and real estate and a tactical strategy, strategy, right, real assets that can perform well, in an inflationary environment, maybe my bonds are on the shorter term side, because those tend to do better with inflation and rates picking up so those are the things to consider not making big changes, but really small tweaks to your portfolio. Right. And, you

Anthony Saffer 1:51
know, we preach diversification and that’s a great way to to Absolutely. Alright, the third thing is to think strategically.

Alex Okugawa 1:57
Absolutely. And so when you think about this, you want to look at what is good for one person might not necessarily be good for you. For example, it could make sense to keep a low rate mortgage in an inflationary period, right? If that low rate mortgage is really low, that means you can keep more money invested in the markets, which should perform well over long periods of time, that might be a better situation. But again, each person situation is unique and has to be tailored for you,

Anthony Saffer 2:26
right looking at your own financial plan, because it as inflation takes off the news, just really headlines that says all the extremes that people should be doing, and that may not necessarily be the case.

Alex Okugawa 2:36
Absolutely. This is the kind of stuff we help folks with. Again, when we look at financial plans, we want to be looking at what is the inflation rate we’ve used in your financial plan? Are your investments aligned to help meet your goals and objectives? hit that target rate of return that we’re looking for in your financial plan? And what are the ranges of outcomes for your success, especially when we’re heading into an inflationary environment which we might be? This is very important for a retiree. If you’d like to talk to us, give us a call, visit our website. We’d love to talk with you.

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This does not constitute an investment recommendation. Investing involves risk. Past performance is no guarantee of future results. Consult your financial advisor for what is appropriate for you. See our website at onedegreeadvisors.com for full disclosures.

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