From your paycheck to your trip to the grocery store, inflation affects many factors related to daily life. Curious how inflation may impact your investment strategy? UKFCU has got you covered with a live virtual seminar to help guide your approach to investing! Join UKFCU along with Nathan Bay, Financial Advisor with CFS* as we discuss topics such as:
– What is inflation?
– Where does it come from?
– How does it affect us?
– How can we prepare and thrive during these times?

Investment services at UKFCU are provided by CUSO Financial Services.*
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*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. The Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members….(read more)

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Inflation is a key consideration for anyone investing their money. Inflation, simply put, is the rate at which the general level of prices for goods and services is rising, resulting in a decrease in purchasing power over time. This means that the same amount of money will buy fewer goods and services in the future than it does today.

So, how does inflation affect your investment strategy? Well, it’s important to understand that inflation erodes the real value of your investments. For example, if you have $100,000 invested in a savings account with a 1% interest rate, and inflation is running at 3%, your real return is -2% – meaning that even though your balance is growing, the purchasing power of your money is actually decreasing.

Given this, it’s clear that to preserve the real value of your investments, you need to earn returns that outpace inflation. If you don’t, you run the risk of losing money in real terms. This is why many investors turn to assets that historically offer higher returns than inflation, such as stocks, real estate, and precious metals.

When considering how inflation will affect your investment strategy, it’s also important to remember that different asset classes respond differently to inflation. For example, stocks have historically proven to be a good hedge against inflation, as companies can raise the prices of their goods and services as inflation rises, which can translate into higher profits and stock prices. Real estate can also be a good investment, as the value of property tends to rise with inflation.

On the other hand, bonds are generally not as effective at protecting against inflation, as their fixed interest payments are eroded by rising prices. Cash investments, such as savings accounts and CDs, are also vulnerable to inflation, as the interest paid is often lower than the rate of inflation.

Ultimately, when it comes to investing, it’s important to consider how inflation will impact your returns and adjust your strategy accordingly. Diversifying your portfolio with assets that have historically outperformed inflation, such as stocks and real estate, can help protect your investments from the erosive effects of inflation. Additionally, regularly reviewing and adjusting your investment strategy to account for changes in inflation and economic conditions is key to preserving the real value of your investments over time.