While the recent rise in prices for goods and services has been attributed primarily to the world’s reopening, we don’t know how long it will last or how we should react financially amidst a pandemic.
Increased prices may involve limiting any splurge spending to avoid a large hit to your wallet for the average consumer. However, if you invest, you’re probably more concerned about your money losing value in the market. Companies are scrambling to deal with rising commodity prices, supply constraints, and higher wages due to labor shortages as the economic recovery gains traction in the face of an uncertain pandemic path.
Here are some tips you can do to navigate in this time of uncertainty.
- Find the Highest Interest-Bearing Savings and Checking Accounts.
No matter what, we will all need some cash on hand at all times, even if inflation becomes extremely high. To put you in the best position possible, be sure to keep your money in the highest paying savings/checking accounts.
As inflation rises, your money will be safer in these vehicles than in those that do not earn interest or in more speculative investments. Having cash on hand is important regardless of the inflation rate. Just make certain that you are receiving the highest possible interest rate regardless of where you keep your money.
- Invest in Real Estate.
Owning real estate can be a great hedge. Rents may rise if you own rental property in an inflationary environment. The ability to increase future cash flow provides an inflation hedge on your cost of living.
- Manage your Expenses well
Lock in the price of your expenses and avoid purchasing items where supply disruptions are causing a temporary price increase. Fixing the interest rate on your liabilities is a good way to hedge because you no longer have to worry about rising costs.
- Stay Invested
Stay invested and stay away from cash or short-term cashable investments. Own stocks in your portfolio with strong balance sheets, profit growth, and pricing power. This will increase dividends and share prices.