Inflation - A Few Things to Consider

September CPI was an increase of 4.4%* from last September. What’s been prevalent in the US and on the news is happening up here in Canada as well. The reasons for inflation are varying and complex including:

-supply chain challenges and limited inventory

-higher demand due to pent up post-covid spending

- oil prices surging (Side note – Gas price at the pump is up 32.8% from last September. Oil price and pump price don’t often move in sync but it feels a lot like it at the moment!)

Higher than “ideal” inflation is here. What is one to do about it?

First off – a well-designed portfolio is designed to grow your wealth over and above the rate of inflation. Below are some of the more common indexes that capture majority of the investible market globally as well as some Canadian and International fixed income for good measure.

From Jan 2000 to August 2021 a dollar in each of these indexes turned into the following:

A good, well diversified portfolio will always have elements of these (and sometimes more). Therefore, trying to figure out how to try to time which of them will do better than another at certain temporary periods is likely to do more harm than good.

However – this also serves as a warning. Winter is coming. Utilities tend to be higher, groceries and gas cost more (at a time when we will be driving to see loved ones), and Christmas for many is already a time where the budget can often get a bit stretched between gifts, meals, and hosting. If there was ever a time to be more mindful of spending and setting aside a few extra dollars for the holidays – now would be it.

#inflation #portfolios #investing #personalfinance #bigpicture?#spending

*Inflation Stats sourced here: https://www150.statcan.gc.ca/n1/daily-quotidien/211020/dq211020a-eng.htm?indid=3665-1&indgeo=0