With inflation climbing and gas prices hitting everyone’s wallets, we reached out to a financial expert to ask what can be done to make our money go further. Dan Texada is a financial advisor and the president of Texada Wealth Management. He has seven years of wealth management experience, and is Series-7 and Series-66 licensed. He can be reached at 985-630-0801 or at dan@texadawealth.com.
Fed on the Move
We are all beginning to feel the effects of inflation, from higher gas prices to paying more for milk and eggs. And have you tried to buy a new or used vehicle lately? It’ll cost you. Add in the invasion of Ukraine and heightened volatility in the markets and sure makes staying positive these days easier said than done.
In an effort to chip away at inflation, as expected, the Federal Reserve raised short-term interest rates by 25 basis points (.25%) on 3/16/22, the first rate hike since the end of 2018. The Fed also signaled additional future rate hikes as well as Quantitative Tightening.
With all of these events taking place at the same time, savers and retirees tend to adopt a short-term mindset. One approach that may help is separating issues into what you can and can’t control. With investing for example, you can control your short-term and your long-term target. Short-term goals like saving for a summer vacation or large household expenses should still be on track despite the rocky start to 2022. Long-term goals benefit from the power of time and may still be within reach on your initial schedule.
What savers and retirees should keep in mind is that, over time, these periods of heightened volatility give way to higher peaks. While there seems to be negativity all around us, we still see many reasons to remain optimistic: economic growth continues, corporate profits are high, and long-term interest rates remain very attractive.
We are starting to see savings rates increase. This can be a useful short-term strategy to hedge against inflation. Also, with the many shifts that have taken place in the markets, this is a good time to review your portfolio’s asset allocation to make sure you are staying within your aligned risk tolerance and diversification.
While we don’t know what the future will bring, if history is any indication, we will get through this. It’s important to remain calm and seek guidance from an advisor who helps their clients maintain a long-term perspective and a disciplined approach.
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The views stated are not necessarily the opinion of Cetera and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.
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