As Inflation Reaches New 40-Year High, 5 Financial Advisors Explain What They Are Doing With Their Own Money Amid High Inflation
In June, the annual rate of inflation in the United States hit 9.1%, a new high in four decades, according to the latest consumer price index data. Inflation hasn’t been this high since 1981, as the prices of everyday items, including gasoline, housing and food, rise. So we asked financial advisors: What do you do with your own money to fight inflation? (You can use this tool to be matched with a financial advisor that meets your needs.)
Quality Corporate Dividend Growth Stocks — Leslie Thompson, Chief Investment Officer at Spectrum Wealth Management
“To combat the effects of inflation on my future purchasing power, I invest in dividend-growing stocks focusing on quality companies with competitive brand positioning, strong balance sheets and growth in earnings. cash flow and earnings – which is different from investing in a stock with the highest yield Some stocks may not have a significant yield today, but the company has the will and ability to increase its long-term dividends Over time, dividends have made up a substantial portion of the S&P 500’s total return. growing cash flow through a growing dividend stream, says Thompson, who points out that in her case, she has “at least 10 years before she needs access to my investment portfolio.”
Equities and Real Estate — Andrew Ross, Private Wealth Advisor at Integrated Partners
“I have a long-term horizon, so I mainly invest in stocks to fight inflation. Given enough time, stocks have historically outpaced inflation by a wide margin,” says Ross, who is also a Chartered Financial Consultant and Certified Plan Trustee Advisor. “To go further, as a long-term investor, I view 10%, 15%, 30% market declines as opportunities for me to buy stocks of big companies at a discount.”
“I also believe that real estate is an essential part of a well-diversified portfolio, and it’s also an excellent inflation fighter. My primary residence has gone up in value and my rental property has not only gone up in value, but our rental income has gone up every couple of years,” says Ross. (You can use this tool to be matched with a financial advisor that meets your needs.)
Agricultural and real estate investments — Tatiana Tsoir, chartered accountant and author of Dream bold, start smart
Real estate is a good investment during inflation, says Tsoir, who adds that she owns “a few rental properties along with our primary residence.” And she adds, “Skyrocketing gas prices along with inflation got us thinking about buying farmland and other agricultural investments.
A diversified stock portfolio and very short-term cash — Kyle McBrien, Certified Financial Planner at Betterment
“For the money I need in the next few months, I keep it in cash because I know roughly how much I need and when I will need it. Yes, I may lose purchasing power due to inflation, but the alternative is to invest my funds to keep pace with inflation. In this alternative, I risk losing money because of the market volatility that we have seen a lot lately. The downside 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,” McBrien says.
For the money McBrien needs in the long run, he’s not changing anything and he’s staying aggressive given his long-term horizon. “Stocks have always been a strong long-term hedge against inflation, so I keep my long-term investments in a diversified stock portfolio,” McBrien says.
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, invested the proceeds in senior secured private debt with maturities of two years or less that have variable rates. The current yield is close to 6% and this interval debt can be liquidated quarterly,” says Connell.
Additionally, Connell says she considers herself a watchmaker (someone who collects watches). “Luxury watches have grown over 60% in the past decade and the trend is expected to continue as luxury watches are seen as a means of storing wealth. Even crypto millionaires have traded some profits for luxury watches,” says Connell. (You can use this tool to get matched with a financial advisor that meets your needs.)
This story was originally published in March 2022.