Recently, you may have noticed that your grocery bill has gone up even though you have been buying the same amount of food. What you’re witnessing is the result of the latest inflation. According to Monetary Authority of Singapore, the overall inflation, or Consumer Price Index (CPI) has soared to 6.7% as of June 2022, with a core inflation of 4.4% year on year.
Inflation is the increase in prices over time with that rate expressed as a percentage. With increased prices, the value and purchasing power of money decreases. But for investors, the main concern would be your money losing value in the market. However, it may not be all bad news as there are ways that you can hedge against the inflation surge as an investor. You may choose to speak with your financial planner at this time to reassess your investment plan. One of the best strategies during inflation is to invest in long-term plans and diversify your portfolio.
Now’s the time to build a stable investment portfolio that maximises returns while keeping risks low. For this, you may wish to invest in unit trust and investment-linked policies. It is important to diversify, so you reduce the volatility of your portfolio as you spread the risk across a variety of holdings.
If your goal for investment is to keep up your nest egg, what you’ll want to do is invest in various asset classes and industries. It would be wise to invest in long-term holdings such as bonds or REITs if retirement isn’t imminent for you.
For new investors, now can be a good time to get started with investing in order to beat inflation. After all, the money that you have today will have a lesser value tomorrow. While that doesn’t necessarily mean it’s a good time to spend, you can instead invest your money to see returns in the long run.
Overall, it’s good to use this inflation period to review your overall investment portfolio and performance. While some lifestyle changes may be needed, it does help to be mindful about where our money is going to allow it to have more value in the future.
Speak to our seasoned financial advisors today as we better advice you on how to reach your financial goals!