Inflation, Interest Rates, and Investment Volatility – Part 2

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It seems like all the talk lately as been inflation, interest rates and investment volatility. Every time you look at the news you see rising inflation numbers, gas prices seem to have actually gone up again and the stock market has been crazy volatile. Add in another interest rate increase by the Federal Reserve and the list of issues gets longer and longer. We didn't have enough time to dig deep into all of these things so, let’s see if we can make some sense of what’s going on and what we can do about it.

We began discussing inflation and interest rates on our last episode, but there’s too much happening right now to cover it in just one show.

That’s why we’re moving to part two of our conversation. We’ll continue breaking down the rising costs Americans are facing and the reasons inflation hasn’t slowed down.

This continues to be a popular topic in our office as people are suddenly staring down difficult economic conditions and trying to grasp what it means for planning. Inflation is always a part of our planning process but it’s not something people are thinking about regularly until it hits them suddenly and significantly.

What’s really interesting about interest rates is they’re back around 5% and it feels like we’re in place we haven’t been for a while. But you don’t even have to go back a full four years to find similar rates, which speaks to how they’ve been the last few years.

The Fed will use this lever to try and help with inflation but there are so many other factors weighing into it like world war, COVID in China, and the supply chain fallout. It’s created an imbalance of supply and demand that hasn’t been able to keep up. The good news is people are traveling more and we’re spending money, but the price of fuel keeps weighing down out pocketbooks.

Meanwhile, higher wages and fewer workers makes its way through the economy as well. Just last month, nearly 4 million people left their job. Workers feel confident that they can find better pay and better working conditions elsewhere. Don uses an example of a client who recently visited Disney and couldn’t believe the price increases. But maybe more surprising was the drop in customer services due to the lack of workers. So that’s a real-world example of how higher wages are passed on to the consumer.

We know that all of this volatility will weigh on the market so it’s a good idea to tally up your expenses and understand how much cash outflow you have each year. You may or may not need to change anything, but you do need to understand how inflation might impact you risk of running out of money.

Inflation, for the time being, will continue to be high as long as oil is up and supply chain isues continue. Understand it, accept it, and look closely at the impact it has on us individually. Times like these require patience, education, and understanding. Lean on that relationship you’ve built with your advisor to navigate the challenges and you’ll come out of it stronger on the other side.

If you haven’t taken inflation into account with your retirement plan, use this as an opportunity to make the appropriate adjustments. Your investments need to outpace inflation or you put yourself at risk of running out of money.

Join us today as we breakdown these issues and more on this episode of Your Money & Your Life.

If you have any questions for Don reach out at (732) 784-2867 or

Listen to the full episode to learn more or skip around to certain topics.

[0:53]Allergies and COVID

[2:29]Used car prices

[3:51] – Setting up part 2 of the conversation

[5:32] – Last time rates were at 5%

[6:19] – Interest rates

[7:21] – World events impacting inflation

[8:31] – Imbalances

[11:51] – Wages and workers

[14:11] – Other price increase examples

[15:16] – Hidden tax

[17:21] – What can individuals do today?

[20:37] – Investment strategies

[23:09] – Closing thoughts

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Donald W. Cash – CPA, CFP®, is an independent advisor. After graduating from Rutgers University, he began his career in 1985 as an accountant. In 1990, he entered the field of Estate Planning, concentrating on long-term care planning. Don has been advising clients in the baby boomer and retirement market for 20 years. He has helped over 1,000 families with their planning needs.

Don advocates for a holistic approach to Estate and Financial Planning and has relationships with other professionals including Attorneys, CPA’s, Mortgage Specialists, Insurance Specialists and Asset Managers.

He is married to Cathy and they have 4 children, Carly, DJ, Nick and Tori. They live in Freehold, NJ.

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