The first part of this series explained how increasing inflation and rising interest rates will impact the economy. We can expect our buying power to erode, prices to increase, and economic growth to slow. However, there are many actions we can take to protect our finances and possibly grow our wealth even during times of inflation and higher interest rates. Through part two of this two-part series, we will list multiple methods of protecting your finances that you and your financial advisor can implement now and throughout 2022.

Borrow Sooner Than Later

As we mentioned in part one of this series, inflation and interest rates have an inverse relationship. Meaning interest rates will likely increase to combat the rising inflation within our economy. Therefore, if you have plans to borrow money, whether for a mortgage, car, or any other kind of loan, it’s going to be more beneficial for you to apply for that loan sooner than later. Applying for a loan now could cost you a lot less if you qualify for a lower interest rate.

Invest in Assets That Will Appreciate

Rather than investing heavily in stocks, retirement, or other kinds of index funds, it may be wiser to invest in assets that will appreciate or increase in value. Real estate is a great place to invest your money when inflation is high, right before the interest rates skyrocket. This will help you secure assets that will appreciate more, despite interest rates increasing. Real estate is one of the best ways to secure investments that are less likely to be impacted by the ebbs and flow of inflation.

Other assets that are likely to appreciate include:

Investing in assets that are sure to appreciate is a great way to stay ahead of the increasing inflation and rising interest rates our economy is facing.

Diversify Your Investments

While it is crucial to invest in assets that will appreciate, it is equally important to diversify your investments overall. Putting all of your investment money into one project is a risk on its own, as it puts a lot of pressure on that portfolio to perform. This is especially true when inflation increases, and interest rates change.

Consult your financial advisor and wealth planner to figure out which funds and assets are worth investing in and which ones may be worth letting go of during this time of inflation. At TSP Family Office, we offer multiple solutions for wealth planning and tax saving strategies. One place to start is our Tax Saving Calculator.

Consider Starting a Business

This option may not be a viable option for everyone, especially if your business requires a loan to begin (remember–interest rates will be rising as a result of increasing inflation); however, there are many tax saving benefits to owning a business, and this can trickle down into your portfolio as well. Plus, owning a successful company, even as a side hustle, is another asset that will likely continue to appreciate while diversifying your portfolio, too. If starting a new, low-cost business venture is right for you, this could be a great time to begin.

Don’t Panic

Inflation and interest rates are bound to increase and decrease at different times, so there’s no cause for worry or panic. The best thing you can do is stay ahead of any changes and be smart about your investments. One of the first steps is to work with an advisor to help solidify your plan and assist you with its implementation. A team of professionals and experts working on your portfolio and financial success is the best way to face any economic turmoil with confidence.

Bottom line: A team of wealth planners and financial advisors assisting with your finances is a great way to build wealth safely, especially during times of inflation and rising interest rates. Not sure where to start? Give TSP Family Office a call today! Our team of wealth planners would be happy to help.