Season 6

How to invest with rising inflation

Episode Notes

Whether it’s higher prices at the gas pump or at the supermarket, we’re all feeling the impact of inflation in different ways. Most economists predict that inflation will continue into next year, which could create extreme hardships for seniors living on a fixed income or for those who have had to use more of their retirement assets than they planned for. With the high likelihood of the Fed raising interest rates next year to tamp down inflation, these actions could put a damper on the surging stock market. That’s why now may be a good time to look over your portfolio to see if minor adjustments might be needed to reduce inflation risk in your investment accounts. For example, on the bond side you may want to invest in Treasury Inflation-Protected Securities (TIPS) or I-Bonds, whose interest rates rise or fall with inflation. Or you may want to add a small allocation to gold or gold ETFs, since this precious metal historically has served as a hedge against inflation and volatile stock prices. If you’re very speculative, you might even want to consider making a very small investment in cryptocurrencies. However, If you feel that your portfolio is allocated in a way that combines decent income generation from bonds and capital appreciation from stocks, and you have an adequate reserve of cash for emergency purposes, you may not need to make radical changes to protect against inflation, especially since no one really knows how long it will last. If you’re not sure what steps to take, a qualified fee-only fiduciary financial advisor can offer common-sense advice to help you better “inflation proof” your retirement nest egg without sacrificing its long-term growth potential.

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Directly rolling over a 401(k) plan to an IRA with a custodian like Fidelity, Schwab or Vanguard is something most people should do as soon as possible after they retire. Why? Because most 401(k) plan investment options are designed for people saving for retirement, rather than for those who need their nest egg to generate income to help pay for everyday expenses. Rollover IRAs offer access to a wider variety of investment options, many of which may have lower expenses than the funds in your 401(k) account. But since you may need money in your IRA to last 20 years or more, you may not feel confident making your own investment decisions. A low-cost robo-advisor can automatically invest your rollover IRA money but won’t be able to answer your questions or address your concerns. That’s why it may be worth paying more for the services of a fee-only fiduciary financial advisor. They not only can manage your investments but can come up with a comprehensive plan to address the financial opportunities and challenges you may face during retirement. 

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Show Episode Notes

Podcast Hosts

Pam Krueger

Pam Krueger

Terry Savage

Terry Savage

Richard-Eisenberg

Richard Eisenberg

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