Warren Buffett saw inflation come early

As prices skyrocket, here’s how to reduce the impact on your wallet

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Rising prices and uncertainty about their lifespan are putting Americans in a bad mood.

Inflation was significantly worse than expected in October, as consumer prices climbed 6.2% from a year ago. This inflation rate was the highest in more than 30 years, led by energy, housing, food and cars.

When prices started to accelerate earlier this year, some pundits, including “the Oracle of Omaha,” sounded the alarm bells about soaring prices.

“We are seeing substantial inflation,” Warren Buffett told attendees at his Berkshire Hathaway company’s annual meeting of shareholders in May. “We are increasing the prices. People are raising the prices for us, and it is accepted.

Here are eight strategies to help you worry less about the impact on your finances – or even get you through it – as inflation rises.

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1. Play on the stock market

Stocks have historically outperformed inflation to a large extent, making them one of the strongest hedges against high prices.

You can use inflation to your advantage by investing in areas of the economy that could benefit from rising prices, including food, technology, building materials, and energy.

There are many innovative applications that can help you invest in the market. Weigh the pros and cons of each, find the one that suits your financial needs, and step into the game.

2. Be precious

Gold and silver nuggets on a black background.  Precious stones, luxury concept and mineral drainage.  Industrial activity, treasure and fortune.

RHJPhtotoandilustration / Shutterstock

Inflation fears generally draw new attention to durable assets such as gold and silver. Both commodities have performed well over the past five years, with the value of gold increasing 52% during this period and silver by around 49%.

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You can own precious metals directly by buying coins or bullion, or you can take a more passive approach and invest in exchange-traded funds, or ETFs, which include commodities in their holdings but trade like stocks.

A popular investment app can help you add gold or silver ETFs to your investments.

3. Capitalize on the scorching real estate market

Real estate has proven to be one of the most reliable long-term investments you can make. The US real estate market has seen a strong upward trajectory in recent years.

If you’re ready to buy your first home, or already own a home and want to trade it in, compare mortgage offers to find your best rate. Mortgage rates are still historically low – the 5-year fixed rate is once again flirting with interest rates of 2%.

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The lowest mortgage rates tend to go to borrowers with the highest credit scores, so do what you can to boost your credit score a few notches.

4. Beware of variable rate loans

A conceptual look at variable interest rates.  Where next?

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When inflation rises, interest rates often rise. If you have variable rate debt, like a credit card balance or a home equity line of credit, higher inflation will result in higher interest charges.

This is especially true for mortgages. If you have an adjustable rate mortgage, you may want to talk to your lender about refinancing and go for a fixed rate instead.

This will ensure that you will pay the same interest rate until you decide to sell your home or refinance again at an even lower rate.

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6. Reduce your debt

If you have significant debt, but mortgage refinancing or an interest rate swap isn’t right for you, there are always options to reduce the interest you pay to creditors.

A proven method of reducing the cost of your debt is to take out a low interest debt consolidation loan using a free loan comparison service like SmarterLoans).

By consolidating all of your high interest debt into one loan, it will be much easier to budget for a single payment to one lender rather than several.

7. Cut down on all costs you can

You’ve probably noticed by now that most of the suggestions here involve spending money. But cutting spending is also an excellent hedge against inflation.

If you haven’t checked insurance rates recently, there’s a good chance you’re paying more than you should. So do some comparisons and you might find a better deal on your auto insurance or save hundreds of dollars a year by finding a cheaper home insurance policy.

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8. Stay the course

Not everyone thinks that the recent spike in inflation is a sign of long-term problems. Warren Buffett noted that Americans still have money to spend.

“People have money in their pockets and they pay higher prices,” he told his Berkshire Hathaway followers in May.

So if you’re comfortable enough with your current finances to absorb the higher prices, you might want to ignore the hype. And, generate extra income in the stock market without much effort, using a popular app that helps you invest your “spare currency”.

This article was created by Wise Publishing. Wise is dedicated to providing information that helps readers navigate the complex landscape of personal finance. Wise only associates with brands that he trusts and that he believes can be of use to the reader. This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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About Mary Moser

Mary Moser

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