We are dealing with high temperatures and high prices! Inflation and interest rates are both heating up. How permanent is this inflation and what can we expect the Fed to do?
If the Fed raises the rates too fast, it risks throwing the economy into a recession. If they raise them too slowly, they risk more inflation. The award-winning economist Milton Freedom said it best, “Inflation is too much money chasing too many goods (and services).”
What is often missing in the discussion about inflation is the lack of goods we are still dealing with from supply chain shortages. Despite high gas prices and fewer people in the workforce, the supply chain seems to be improving.
We don’t know for sure whether this will be a transitory period of inflation or not. The classic reaction is to panic and if you don’t have a risk-appropriate plan there may be a reason to panic. But those of us that are working with an advisor probably don’t need to be worried.
It comes down to education, expectations, and understanding. When we meet with a client, we educate them on how markets work; they go up and down. We have to understand risk and have reasonable expectations when it comes to returns.
If you have any questions for Don reach out at (732) 784-2867 or firstname.lastname@example.org.
Listen to the full episode to learn more or skip around to certain topics.
[0:40] – Are you ready for summer?
[2:53] – Is this permanent?
[4:56] – Raise rates fast or slow?
[6:35]– Fewer people working
[8:00]– What are we going to do?
[10:59] – Education, expectation, understanding
[13:52] – Preparing for unexpected
[15:50] – Buying before a crash
[16:34] – Looking at the big picture
[19:21] – What do we do to protect our wallets?
[21:08] – Don’t inflate your expenses 8%
[22:39] – Expenses aren’t linear