Many Americans are concerned about rising inflation amidst the stimulus-fueled economy. COVID-19 challenged our nation in many ways and now is triggering anxiety as we watch the impacts play out in our economy. Consumers are seeing a surge in goods and services prices. That means your cup of coffee in the morning will cost more while your salary will likely be the same.
What does this mean for your investments?
Traditional investments in the stock market appear bullish. However, the wise investor understands this is an effect of inflation. The market has been pumped with government dollars, which creates the upward trend. If you aren’t removing the inflation effects from your return, you aren’t seeing your true earnings.
Why is inflation bad for your traditional investments?
Typically, inflation is the worst enemy for investors. Inflation is being fueled by an increasing money supply and disruptions in the global supply chain.
High inflation will usually lead to the U.S. Federal Reserve policymakers increasing interest rates. As a result, bond prices will fall and reduce the present value for future fixed cash flow. The opposite happens for stocks. As inflation increases, the market value increases proportionally. Stocks tend to be more volatile during an inflationary period. If you’re retried and living on a fixed income, it’s especially detrimental since the power of your money is diluted.
Fight inflation
To preserve and grow your investment and purchasing power, you’ll need to find investments that see returns high enough to overcome the inflation rate. Many large pension funds have started to embrace alternative investments like the Family Business Fund www.familybusinessfund.com with higher returns to protect their investments against inflation. Combining alternative investments with low correlation to the stock / bond market and your current investments will truly diversify your portfolio and reduce the impacts of inflation and VIX (Volatility Index).
The Family Business Fund (FBF) was created as an investment platform for accredited investors seeking a high-yield fixed income alternative to traditional stocks and bond portfolios. Currently, investors enjoy a 15% fixed ROI (return on investment) which is way above the rate of inflation (5.39%).
If you are interested in pursuing this route and benefitting from all that alternative fixed income investments have to offer, please contact me at: douglas@familybusinessfund.com
