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How to Tackle Inflation and Protect Your Money - Hello all! Well, I don’t know about you but I sure have been noticing the rising prices. And it’s got me thinking’s and somewhat worried about my savings: will they be enough for my retirement? Is my money safe? If you find yourself thinking the same, fear not as today I have a few handy tips to keep you afloat through an inflation and help you protect your money.

Alright, so, without any further ado, let’s get into it.

1. Evaluate your personal budget

Having your own budget is a very good way to start saving your money, but when inflation is involved, you’ll need to reconsider. I’m not talking about living without a budget completely, but rather adjusting it.


It’s no doubt that there are a few things you can cut from your budget— I’m talking about things that aren’t much of a priority.

When you reduce your expenditure by cutting some expenses from your budget, it means you’ll have more money in your pockets.

The good news is that, there are countless ways to reduce your expenditure, for example if you’re used to eating out, then I think it’s time you started cooking for yourself because it’s cheaper (and healthier).

2. Invest in valuable items

Sometimes we invest in things purely for the sake of it. The truth is that long-term, fixed-rate interest-bearing investments (geez, what a mouthful) are the worst kinds of investments to make during inflationary times. 

Any fixed-rate, interest-bearing debt securities fall into this category, although those with maturities of 10 years or more are particularly desirable.

Instead of investing in these, you should invest in things that can’t be duplicated easily, like land, real estate, or gold.

You could also start collecting unique items like trading cards or antiques. Due to their unduplicatable nature, all these things are guaranteed to hold value during hard times, hence protecting and growing your money.

3. Review your investment allocation

When crazy times of inflation begin, it’s a  really smart idea to consult your financial advisor. You have to make sure that the  investments you’ve made match your risk tolerance.

Consider a reasonable asset  allocation of 60% equities and 40% fixed income as an example. You should also consider allocating a chunk to dividend-paying stocks if you are income-focused.

Bonds have historically struggled to keep up with inflation better than stocks. One of the most important aspects of money  management is reviewing your financial portfolio.  

If you don't keep an eye on your investments, they could easily stray from your original plans.  

Therefore, you need to analyse your investment portfolio in a suitable manner. Finding every financial item you own and listing them in one location is the first step in any review process.

4. Understand what drives different assets

Particularly cyclical stocks - such as those in the financial, materials, and industrial sectors - commodities, and foreign equities are worthwhile investments to consider.

Some people are often fooled by historical correlations when they should instead comprehend the fundamental forces that drive the various assets.

Although there may be a negative correlation between Treasuries and stocks, as inflation rises, both of these asset classes decline.

5. Create a mix of investments

When you want to make adjustments to your portfolio, among the factors which you are required to take into consideration is inflation.  

For investors, diversification across a number of different asset classes is crucial in helping them navigate through a period of unpredictable stock market conditions.

To keep up with escalating prices, I believe it's important to combine a variety of investments that are distinct from  one another.

By having a mix of investments, you’ll be securing your money just in case one investment fails, you’ll be sure that the other will work. After all, it’s the market: And you never know where the scale will tip.

6. Maintain a rainy-day fund

Most people make the mistake of investing heavily so that they can counter inflation. Although it’s a good plan, you should first make sure that you have enough to cover you on rainy days.

If you really want to live stress-free in tough periods of inflation, then you should definitely consider having at the very least $1000 in your emergency fund, however, it’s recommended to have 6 months’ worth of expenditure saved. 

Opt for a high-yield savings account for your emergency fund as well as other short-term savings that you require quick access to. 

Compared to a bank account or conventional savings account that pays little to no interest, CDs help your money grow (a bit) faster. 

Although it doesn't pay enough to fully combat inflation, the typical savings account does help. You should start by paying off your debts first, before saving money in an emergency fund.

7. Explore the bond market

If you’re debt free and have enough money to take you through 3 to 6 months of living expenses, then you should start taking a look at what investment opportunities will keep up with the inflation rate.

Some of these investment opportunities, like bonds, are 100% guaranteed to succeed. As long as inflation keeps growing rapidly, bond interest rates are always adjusted every 6 months.

Regular interest is paid on bonds, and upon maturity, investors receive their principal back. So, there isn’t really much to lose with this.

8. Invest in your home

In the past few years, home prices have been rising exponentially. This is great news for homeowners, but not so great for the few who want to get into the market.

Experts say that housing prices will stay high despite rising mortgage rates. Even with maintenance costs being so high, I’d advise that you invest in your house before you buy a new one.

Inflation typically results in rising prices for everything, including rent, housing prices, and mortgage rates.

Therefore, if you're thinking about buying a home and believe that inflation may be on the rise, you should wait.

Investing in your own home has so many advantages. Like, due to the fact that their cost is constant regardless of the state of the market, homeowners are protected from rising rental prices.

9. Look at short and midterm fixed accounts

Whenever you see signs of inflation, it’s necessary for you to have a look at your retirement account and prepare for the impending recession.

Considering short-and mid-term fixed accounts, such as 2–5-year fixed annuities, is a wise move. A short-to mid-term annuity can provide up to 3% fixed returns at current rates, whereas money market accounts and bank  CDs offer little to no guaranteed rates.

10. Stay invested in equities that grow

Sometimes we do save a lot of money in our  savings account, but inflation somehow finds a way to catch up with us. The thing is, you should now start investing in equities that grow like stocks. That way, you’ll have your money growing regardless of inflation.

The best course of action in situations like these is to maintain your investment position, preferring long-term assets like stocks. When inflation is between 2% and 4%, stocks perform the best.

11. Don’t keep more savings than you need

The most common misconception is that the  more money you have in your savings account, the safer you are. It’s definitely true, but it’s not advisable in times of inflation. 

Instead of leaving your money in the bank, you should find other ways to make your money grow. But remember: greater gains come with greater dangers.

Investing gives you the best opportunity to grow your money for long-term objectives like purchasing a home, paying for a child's college education, or retiring.

Since stocks have the biggest potential long-term returns, they are most likely to outperform inflation over time.

12. Increase active and passive income

Inflation can be tough on you, especially when you have no plan to counter it. If your income isn’t enough to counter inflation, then you should find a side hustle to help you with the bills.  

Some of you already have found a side hustle, yet you’re still struggling to pay your bills. Well, there’s an easy way to combat this. 

Normally, inflation is estimated to rise by 5% each year, however, right now, according to the US Labour Department, inflation is at 8.2%. So, what you need to do is to ensure that you’ve also increased your earnings by at least 8%.  

Find different ways to earn some more money.  One suggestion is to consider renting out any excess rooms, storage units, parking spaces, or expensive tools like lawnmowers or snow blowers to earn some extra cash with a little more work. Do this and you’ll be on the safe side.

13. Know that not all  investments will be affected

Every investment always has risks attached to it. This is the main reason some people won’t invest. The truth is, scared money doesn't make any money.

You will probably lose some money when you invest and also gain some profits in other investments. Such results are the new normal in the current market.

So, if you’re scared of  losing your money on investments you should invest consult with a financial or investment advisor first, before plunging in. This way, you’ll receive professional advice and aid.

14. Don’t make any drastic decisions

Some people have made the mistake of rushing to make decisions to invest in the money market just out of fear of inflation. One thing you should know is that this can sometimes be very dangerous for you.

Now, instead of making rash decisions during inflation, just take your time and do the proper research. We know from experience that unanticipated occurrences may, and do occur, so stay diversified and rebalance as  necessary.

Take your time to choose the most effective way to beat inflation, be it by investing or starting a side hustle.

15. Get rewarded

We sometimes underestimate the rewards from credit cards when, in reality, they really help us save a lot of money. You can use your credit card to obtain money back on purchases that you must make anyhow.

Every time you swipe, make a purchase using a card that grants statement credits, travel rewards, or other benefits.

Technically, credit card rewards usually come in two varieties: cash back cards and travel rewards. Cash-back cards reimburse you for a portion of each transaction's cost.

Each dollar you spend on a credit card with travel rewards earns you points or miles that can be redeemed for things like free flights and hotel stays.

16. Shop smarter

This is definitely the easiest thing you can do when there's inflation. If you were used to buying your groceries at a place that’s expensive, then you should find somewhere cheaper.

You should strive to spend as little as you can. That way, you’ll be saving more money despite being in the middle of a recovering economy.

Beating inflation isn’t something to break a  sweat over. With the few tips I’ve given you, I’m sure you’re in a good place to start.  

Before you make any decision about what to do or how to tackle inflation, you first need to weigh the options you have. Some may work, while some may fail. But when you fail, don’t lose hope just have a go again.

Well folks, thank you so much for reading. Until next time, take care!

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