Inflation can create concerns for investors. As prices rise, your money won’t go as far as purchasing power decreases. This causes many to panic and make changes to their portfolio. Mike Reeves of Strategic Wealth Designers joins us today to discuss investing when inflation rises. Mike, what do people need to consider?

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Inflation is the rate at which the general level of prices for goods and services rises, leading to a decrease in purchasing power. When inflation rises, it can have a significant impact on investments. However, there are strategies that investors can use to protect their portfolios and even profit from rising inflation.

One common way to invest when inflation rises is to allocate a portion of your portfolio to inflation-protected securities, such as Treasury Inflation-Protected Securities (TIPS). These securities are specifically designed to protect against inflation by adjusting their principal value based on changes in the Consumer Price Index (CPI).

Another strategy is to invest in commodities, such as gold, silver, and oil. These assets tend to perform well during periods of high inflation, as they are seen as a hedge against currency devaluation. Additionally, real estate can also be a good investment during inflationary periods, as property values tend to rise with inflation.

Inflation can also benefit certain businesses, such as those with pricing power or the ability to pass on cost increases to consumers. Companies that produce essential goods and services, such as food and healthcare, are examples of industries that may benefit from rising inflation.

Investors can also consider adjusting the duration of their bond holdings during periods of rising inflation. Long-term bonds are more sensitive to interest rate increases, which often occur during inflationary periods. By shortening the duration of their bond holdings, investors can reduce their exposure to rising interest rates.

Finally, investors can consider diversifying their portfolio and investing in assets that have historically performed well during inflation, such as real assets like commodities and real estate, as well as equities with pricing power.

In conclusion, while rising inflation can pose challenges for investors, there are strategies that can be employed to protect and even profit from inflationary environments. By allocating a portion of their portfolio to inflation-protected securities, commodities, real estate, and companies with pricing power, investors can navigate the effects of inflation and position themselves for long-term success. It is important for investors to stay informed and adapt their investment strategies to changing market conditions.