What Is the “Conservative Investor” Trying to Conserve?

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In this month’s client’s corner, we will be discussing how to protect your portfolio from inflation. Similar to how taxes can chip away at your earnings, so does inflation. We often describe inflation as financial death by a thousand cuts. Investors too often look at “the numbers” in their portfolio without asking what those numbers can actually buy over time.

There is no such thing as an inflation-proof investment, but investors can take measures to protect themselves. Risk-averse investors, particularly those nearing and in retirement, will need to be especially careful of what inflation can do to their standard of living if their investments can’t keep pace with inflation. For equity investors, companies that are able to pass on their cost increases to customers and corporations that have low debt offer some safety in an inflationary environment.

Looking back at points in history where inflation was raging, real assets, like stocks, dividend paying ones more specifically, have always been the best way to protect your wealth.

Our belief is that you must construct your portfolio proactively factoring in inflation and short term volatility and always remember that investing doesn’t happen in a straight line. There will be bumps along the way, but time will generally heal all wounds. Rash decisions based on emotions can be devastating to your overarching retirement goals. 

Thinking about hiring a professional to help you implement a long-term financial strategy? We would be more than happy to set up a 30-minute discovery call to get a better understanding of your unique situation.

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