Stivers Financial Services


What should you be doing now to protect your finances from inflation?

Inflation is a word that has mostly disappeared from Financial Advising discussions over the past decade or two. Housing, energy, food, clothing, and other daily needs have increased dramatically since the onset of the Covid Crisis.  So, what should you be doing now to cope with these inflationary times?  Below are some of my most common tips to my clients:

#1 Consider reallocating to more inflation friendly equity sectors.  These can be sectors such as energy, banking, consumer staples, healthcare, and other sectors that tend to do well during inflationary times.

#2 Use a more active form of management vs passive management (this will be discussed in next week’s blog).  This form of management will have a process in place to move towards equities with likely momentum and away from equities trending downward.  This is an effective way to manage tip #1 above.

#3 Keep the right kind of debt and get rid of the wrong kind.  If you have a low interest rate fixed mortgage and have been paying extra to pay it off early, it may make sense to pay your normal payment and divert the extra towards credit card debt.  You are likely already paying substantially more in interest on the Credit Card debt and it is likely to go up in inflationary times.

#4 Delay buying new bonds or long-term fixed type savings accounts.  It is likely that interest rates will rise to deal with inflation.  As they do more favorable bonds and fixed income instruments will most likely become available.

#5 Great time to give to your favorite charity.  If you are thinking of doing it at the end of the year, keep in mind that at 6% inflation your contribution will have less of an impact at the end of the year then today.

#6  For more aggressive investors it could be a good time to consider commodities such as oil, natural gas, wheat, corn, and other commodities that generally do well in inflationary times.  Using ETFs (Exchange Traded Funds) can be an excellent way to easily reallocate a small percentage of assets into commodities.

#7 Buy every day consumer staples in bulk through a warehouse store or when dramatically on sale to lower daily costs.  Also consider purchasing clothing at end of season sales and brand name outlets.  This can often reduce costs on your favorite brands 50% or more.

No one knows if the inflation we are experiencing is a short-term problem and will resolve itself on its own or if we are headed into a longer economic adjustment as we did from the late 70’s to the early 80’s.  But having a process in place to deal with ever changing economic, political and market conditions can greatly lessen your anxiety and bring greater confidence in your financial and retirement plan.  If you would like to discuss how Stivers Financials “Four Cornerstone Process” might assist you in creating this process, give us a call at (865)288-7685 or visit our website home page at where will find an automated appointment setting link.  Have a blessed Day!


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