Inflation seems to be all we hear about in the news, often including a doom and gloom narrative about rising grocery prices, the cost of fuel, your drink at Starbucks, rising interest rates, etc. What we don’t often hear is what we can do about it – how we can wisely grow our assets in the midst of uncertain times.
What Causes Inflation?
Most of us are familiar with the causes of inflation, but let’s take a brief refresher.
Simply put, inflation is a rise in prices. At the root of inflation is an increase in the production of money over time; this is why the price of gas when you started driving looks much different than today.
There is, however, no one cause that encourages inflation rates to spike, like what we are seeing today, but rather a combination of factors. From labour shortages, supply chain issues, global events such as COVID-19, and an increase in money production, analysts have plenty of theories to argue about regarding the contributing factors to Canadian inflation.
Investing in the Midst of Inflation
Inflation isn’t just a North American issue, but rather a global issue with central banks from across the globe warning of a potential recession. For investors, this can ring some major alarm bells, and rightfully so. However, this doesn’t mean that investing should be off the table; instead, investors should be more selective than ever when choosing stocks to invest in.
With interest payments on the rise, investors should be wary of investing in companies that have racked up a lot of debt – now is not the time for volatile investments. Alternatively, search for companies that have a good record of financial performance and have a better shot at managing high interest rates.
Investing isn’t for the faint of heart; on the best of days, you’re still putting your trust in companies to bring you income. When investing, nothing is guaranteed besides the fact that there will be highs and lows in the market; inflation is just one of those lows that investors will have to let play out.
To read more about how to combat inflation in Canada, read this article from Forbes Magazine.
Get Help with Your Investments
Inflation is challenging for even the most seasoned investors. Knowing where to invest your money to continue to grow your assets in the midst of a constantly evolving landscape can be a stressful task.
Thankfully, you don’t have to go it alone. RaeLipskie’s team of Private Wealth Managers manages your tailor-made portfolio of stocks, bonds and alternative investments with an emphasis on achieving your investment objectives. With a bias for quality companies that consistently demonstrate the ability to grow their earnings and/or dividends, our team will take away the stress of making wise investment decisions.
To learn more about how RaeLipskie can help you manage inflation in uncertain times, visit our Services page, or Contact Us to get started.