Keep Your Investments on Track While Weathering the Inflation Storm

Planning Your Future Forming Money Habits

Be frugal in the moment while sticking to a long-term plan

You likely don’t need us to tell you: Inflation is through the roof, average gas prices hit an all-time high in June, and the stock market is experiencing a downturn.

Boy looking through coin-op binocularsAll of these negative forces have caused some pundits to posit that another recession is on the way. 

Needless to say, the American dollar doesn’t stretch as far as we’d like right now. And you would be forgiven if you didn’t want to look at your investment portfolio.

But there is good news: The economy has been here before—and always recovered.

While it’s tempting to make drastic changes to your portfolio, sticking to a logical long-term plan for your investments remains a wise choice. There are also smart, subtle ways to be frugal now to help you emerge from the current volatility unscathed.

“Generally, there are things we can invest in—and ways we can allocate money—that can help alleviate the strain that inflation causes,” said Tyler Hague, CFS Investment Advisor at SELCO Investment & Retirement Services*. Keeping a long-term investment horizon and staying properly diversified is your best bet for dealing with inflation or any type of market disruptions.”

Midterm elections may trigger a recovery

The S&P 500 index, a barometer of the stock market and economy, officially entered a bear market in June. What that means is, the S&P 500 has experienced a decline of 20% or more for a prolonged period. The unwelcome news is your investments will unfortunately lose some of what had been gained. But the good news is, the S&P has always bounced back from bear markets. And historically, the most significant valleys and peaks take place in the 12 months preceding midterm elections and the year that follows. With the 2022 midterms looming, a booming market may very well follow.

Dig deep for opportunities to save

In the meantime, to ensure that ends meet, you may consider other ways to save while keeping with your long-term investment plan: 

  • Refinance your loans. After reaching historic lows, interest rates have climbed back up, but it still could make sense to restructure your mortgage or vehicle loan. Even at a slightly higher rate, you can lower your monthly payment by extending the term to pay off your loans.

  • Review your insurance policy for savings. Stellar driving record? Most insurance providers reward safe drivers with lower premiums, vanishing deductibles, and rebates. And now with select providers, you can even earn rewards toward discounts on wellness products and life insurance premiums.

  • Switch up your day-to-day. Every spending decision adds up, regardless of whether money is tight. Here are some simple life/budget hacks that can temporarily cut costs (or permanently if they fit your needs):
    • Pause your streaming subscriptions for a few months.
    • Reassess your TV or cellphone plans.
    • Explore new haunts close to home as opposed to extravagant vacations.

Evaluate, adjust, and stay patient

If your priorities have changed, due to inflation challenges or otherwise, and you need a little more breathing room, you can always revisit your portfolio and make adjustments. Consider the following maneuvers: 

  • Reduce your contributions. If you’re contributing to a company 401(k), IRA, or other investment account, consider scaling back your monthly contributions (or pause them completely) knowing the funds can still grow and you can pick it up later. If your employer contributes to your 401(k) plan, that’s an extra layer of security if you decide to stop putting money in for a while.

  • Keep diversifying your investments. Another way to stay ahead is to invest in assets that tend to outperform the market during inflation. Balancing your portfolio with common anti-inflation assets—dividend stocks in sectors like energy, consumer staples, and real estate tend to perform well—provides a nice buffer until the market corrects itself. SELCO’s Investment & Retirement Specialists are available to answer your questions and offer suggestions.

“Evaluating and adjusting your portfolio throughout your investing life is critical to long-term success. We won’t invest the same way at 25 as we will at 55, nor should we,” Hague said. “Whenever there’s a market downturn, invariably we wish we would have bought more when the market was volatile. But as long as we invest for the long-term, short-term disruptions shouldn’t factor into our investing strategy at all, even if they can make you uncomfortable.”

The sluggish economy of 2022 has been challenging for many, to say the least. But this too shall pass. By taking advantage of savings opportunities while trusting that your investments remain safe, you should remain on solid ground until the economy can make a recovery.


*Nondeposit investment products and services are offered through CUSO Financial Services, L.P. ("CFS"), a registered broker-dealer (Member FINRA/ SIPC) and SEC Registered Investment Advisor. Nondeposit investment products offered through CFS are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. SELCO Community Credit Union has contracted with CFS to make nondeposit investment products and services available to credit union members.

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