• Nate Baim, MBA, CFP®

Inflation & Volatility




Are you concerned about inflation?


This is a question I'm often getting, and inflation is dominating the discourse right now. It's driving the headlines being talked about hourly and wreaking havoc on budgets. We're paying more at the pump, for food, housing, and just about everything else. But for long-term investors, short-term inflation isn't the biggest risk to their financial plans. The biggest risk is actually volatility.


Volatile markets are equal parts stressful and suspenseful. And the volatility right now is being fueled by the Federal Reserve's efforts to balance bringing down inflation with minimizing the impact of a potential recession. The Fed is raising the key short-term interest rates to slow economic growth. This makes money more expensive, which in turn puts a damper on the individual and corporate appetite to borrow money. But as rates rise, uncertainty creeps in. So does volatility. And while markets may be rational, investors typically are not. But there are a few things you can do to combat what's happening right now.


First off, despite volatility, you need to likely keep saving, particularly for your long-term goals like education, retirement, or healthcare, whether it's a 529 plan for your kid's college, 401k, IRA for retirement, or health savings accounts for your health expenses. These types of savings are tax-advantaged. So, you aren't just putting money away. You're lowering your taxable income and taxes in a year. You make contributions.


Second, diversification matters more than ever. This isn't ending anytime soon, unfortunately. So, choosing sectors and asset classes that can keep up with inflation will put you in a stronger position. And while inflation may be outpacing the income generated by the bond portion of your portfolio. Remember that bonds typically have a role in planning and reducing your portfolio's ups and downs.


Right now, it may be painful to look at statement balances. This bear market cycle may not be as quick as the 2020 cycle since the Federal Reserve is no longer supporting the markets. History shows that bear and bull markets come and go. Persistence is typically rewarded. Volatility is uncomfortable for anyone. There's a reason that the index that measures market volatility, the VIX, is called the fear index, but that doesn't mean you should succumb to it. Take stock of where you are, make changes to daily living expenses to stay within your budget, and tune up your portfolio only where necessary.





Have something on your mind?

Schedule a free call with Nate Baim, MBA, CFP®

 

Pursuit Planning and Investments, LLC (“PPI”) is a registered investment advisor offering advisory services in the State of Oregon and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. All views, expressions, and opinions included in this communication are subject to change. This communication is not intended as an offer or solicitation to buy, hold or sell any financial instrument or investment advisory services. Any information provided has been obtained from sources considered reliable, but we do not guarantee the accuracy or the completeness of any description of securities, markets or developments mentioned. We may, from time to time, have a position in the securities mentioned and may execute transactions that may not be consistent with this communication's conclusions. Past results do not guarantee future results. Please contact us at 971-803-5948 if there is any change in your financial situation, needs, goals or objectives, or if you wish to initiate any restrictions on the management of the account or modify existing restrictions. Additionally, we recommend you compare any account reports from PPI with the account statements from your Custodian. Please notify us if you do not receive statements from your Custodian on at least a quarterly basis. Our current disclosure brochure, Form ADV Part 2, is available for your review upon request, and on our website, www.planyourpursuit.com. This disclosure brochure, or a summary of material changes made, is also provided to our clients on an annual basis.


This communication is for informational purposes only and is not intended as tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This communication should not be relied upon as the sole factor in an investment making decision.


Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any recommendations made will be profitable or equal the performance noted in this publication.


The information herein is provided “AS IS” and without warranties of any kind either express or implied. To the fullest extent permissible pursuant to applicable laws, Pursuit Planning and Investments, LLC (referred to as “PPI”) disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability, non-infringement, and suitability for a particular purpose.


All opinions and estimates constitute PPI’s judgement as of the date of this communication and are subject to change without notice. PPI does not warrant that the information will be free from error. The information should not be relied upon for purposes of transacting securities or other investments. Your use of the information is at your sole risk. Under no circumstances shall PPI be liable for any direct, indirect, special or consequential damages that result from the use of, or the inability to use, the information provided herein, even if PPI or a PPI authorized representative has been advised of the possibility of such damages. Information contained herein should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.