As the world economy rebounds on the heels of the COVID-19 pandemic, so far in 2021 we’ve seen concerning signs of rising inflation and have had US economic leaders warning of expected and continued inflation into 2022. With inflation comes an increase in prices and a decrease in the value of the dollar. Wise investors will reevaluate their stock portfolio and look for ways to mitigate inflation.
No single approach is foolproof, however with the aid of an ARQ Wealth Advisors financial planner, there are steps you can take to protect your portfolio from the damaging effects of inflation. ARQ Wealth Advisors is the leader in investment management in Scottsdale, AZ. We have the expertise and experience to customize a specific financial plan for you and your family to combat inflation and to help you stay on track and achieve your financial goals.
Overview of Inflation and How Impacts Your Savings
We have all experienced the impact of inflation. Inflation is why the price of most goods and services is higher now than they were a few years ago such as lumber which may impact new housing costs to gasoline and even daily groceries such as poultry and beef. Pre-emptive planning and strategic investment go far to alleviate the effects of inflation.
In terms of financial planning, it is vital to understand how inflation can harm your savings if you do not have a plan. The most common mistake we’ve seen individuals make is that they aren’t sure what to invest in, so they keep too much of their portfolio in cash savings, which loses value (at a higher rate when inflation is higher).
The best next steps that we recommend when someone has concerns about inflation, especially as it’s been a hot topic in the news lately, is to let us put together a customized financial plan that’s specifically designed to help you, your family, and your risk tolerance. You can give us a call now at (480) 214-9572 in order to speak to one of our professionals to help you set up your free no-obligation financial plan.
Be Proactive in the Managing of Your Portfolio
Establishing a diverse portfolio that accounts for your investment timeline, risk tolerance, and financial goals can help mitigate the impact of inflation. That said, it is necessary to review your portfolio regularly and assess its soundness in the current climate.
A question that we commonly get asked is what specifically we look for / adjust when we sit down with you to learn more about your financial and retirement goals. Although some of the large firms out there apply cookie-cutter and one-size-fits-all approaches, we leverage our team of experts to provide a plan designed just for your unique situation.
One of the first big factors that we look at is your risk tolerance. Although we may make recommendations as typically younger professionals can tolerate more risk as they have a longer time horizon to invest and putting (even a smaller percentage of their portfolio) in riskier investments can be an appropriate strategy. If someone is nearing retirement and looking to just protect their income, a more appropriate investment may be fixed income or a dividend stock to ensure a less volatile investment.
Another component that we analyze centers around what you are looking for out of retirement. Some families may want to keep their current home and live a simple life, while others may want to live a lavish lifestyle that involves expensive future purchases. These goals help us create an overall picture of how much in savings you will need.
There is no fool-proof way to be immune from the impacts of inflation, but working with a team of experts, such as those financial services professionals at ARQ Wealth can help you combat the damaging impact that inflation can have on your savings and investments if you don’t have a plan. Ready to get started? Reach out to us now and visit us at www.ARQWealth.com for your free financial plan. We provide comprehensive financial management services such as portfolio management, tax planning, retirement planning, and much more.