(MarketWatch) - U.S. consumer prices rose at a slower pace than last month, but as Barron’s notes, inflation is still ‘sky high.’ Indeed, consumer inflation rose at an 8.3% annual rate in April, down from 8.5% in March, according to data released Wednesday from the Labor Department. But that’s still nearly a four-decade high.
So we asked eight financial pros what they’re doing with their money amid this period of high inflation. (You can use this tool to get matched with a financial adviser who may meet your needs.)
Upping my commodities exposure — Charles C. Weeks, Jr., certified financial planner at Barrister
“I am doing the same thing with my funds that I did for my clients. About a year ago there was concern of inflation along with rising rates, we shortened the maturities on all of our bond ETFs and added floating rate exposure, but more importantly we allocated 10% in commodities. Earlier this year I increased commodity exposure up to 20%,” says Weeks.
Reinsurance and alternative lending funds — Elliot Dole, certified financial planner at Buckingham Strategic Wealth
“Risks brought on by high inflation and reliance upon only equity and term risks may be managed through adding alternative investments. Reinsurance, long-short factor-based strategies and alternative lending funds have a long-term place in my own allocation. A well-constructed allocation complements a stock and bond portfolio, offering some protection against inflation in exchange for accepting their unique risks,” says Dole.
Online savings accounts for funds I’ll need in 3 years or less — Brendan Mullooly, certified financial planner at Mullooly Asset Management
“I continue to channel savings earmarked for less than three years into online savings accounts. Just because inflation is up from recent years doesn’t mean it’s any more prudent to put short-term dollars into long term assets. Neglecting to take an investment’s time horizon into account at the onset is playing with fire. For savings that have a longer runway, I continue to believe a diversified portfolio of stock ETFs will provide the best possible hedge against inflation over my multi-decade time horizon. So, I have a barbell approach with online savings accounts on one end for short-term goals and retirement accounts with diversified stock ETF portfolios for long-term goals on the other,” says Mullooly.
Investing consistently in small amounts — Kevin Mahoney, certified financial planner at Illumint
“I know that if I invest consistently, in relatively small increments as extra savings are available, the stock market will reward my patience and calm over the long term. How will my returns compare to the inflation rate over the same period of time? I can’t know for sure but I do know that I’m doing just about everything I can while still keeping my financial strategies as straightforward and low-stress as possible,” says Mahoney.
Dividend-paying companies — David Totah, certified financial planner at Exencial Wealth Advisors
“I try to keep all or most of my equity investments in companies that have a consistent track record of performance, and to help to invest in companies that also pay dividends. I look for companies with a solid balance sheet that don’t have excessive debt. With interest rates on the rise, investing in companies with a lot of debt can be risky,” says Totah.
I-Bonds — Tommy Blackburn, certified financial planner at Mason & Associates
“I began buying Series I bonds from the US Treasury at the end of last year and have been purchasing more this year as allowed. Since I’m married, we were able to purchase $20,000 last year and then purchased another $20,000 this year. From there, we have begun purchasing them in our revocable trust and I plan to continue systematically purchasing these until I have about two thirds of my cash and emergency fund in them,” says Blackburn.
Alternative asset strategies — Patrick E. Leardo, director of Domain Capital Group
“I look to invest in more structured, alternative private markets opportunities. Those opportunities may include specific structured alternative strategies such as entertainment royalties or specialty real estate strategies that may provide consistent cash flow based on the structure of the underlying investment opportunities. I would also look for stationary, non-correlated physical assets in the alternatives space, such as timberland. I believe the relatively low volatility and long-term cash yield potential and exit optionality make this, and other alternative asset strategies, attractive during market cycles like we’re experiencing,” says Leardo.
Mainstream equities — Jonathan Blau, president and CEO of Fusion Family Wealth
“I invest in what is arguably the most consistent and best long term inflation hedge ever created by humankind, mainstream equities,” says Blau.
By Alisa Wolfson
May 11, 2022
