Long term inflation has averaged about 2.5% but for the last year it is over 4%. Many are asking, what if this continues? Carl Carlson, CEO of Carlson Financial, has 5 Key Ways to fight inflation.
He said, with higher-than-normal inflation likely on the way, trying to employ the 5 Key Ways to fight Inflation may become very important to our financial plans.
- Track your personal inflation rate - we all spend money on different things and those different things are inflating or not inflating at different rates. Adjust your spending based on your personal inflation rates. If beef is rising in cost fast but chicken isn’t, switch to chicken. Sometimes certain types of meat are rising at a faster cost than another.
- Speak with your employer about a bigger raise at your next review to help combat inflation
- Make sure your investments are ones that will do well if high inflation continues. (i.e. Microsoft stock versus Lululemon a high end athletic company)
- Take advantage of a 30 year fixed rate mortgage. The cost of your personal housing won’t go up, while your income should. If you have more than 20% equity in your house, you can take cash out on a refinance and invest it in safe products that very likely will provide returns greater than your mortgage rate and then you can take the earnings and invest them more aggressively in things like stocks of great companies.
- Delay social security by drawing down on low return safe investments first. If your age is 65-66 and you are just retired you're getting ready to start your social security once you hit that full retirement age and for many people, that is 66 or 67. If you don't start social security, it will grow by 8% a year until age 70 So if you can, let it grow if inflation is 4% and you're getting an 8% increase their you're beating inflation.
