How Does Inflation Impact Investment Portfolios? | Brandon Averill & Justin Dyer | AWM Insights #65

Recent reports have shown jobless claims falling to new pandemic lows and wages growing, but there are also some indicators that prices might be ticking up as well – potential signs of inflation. The Consumer Price Index (CPI) rose by 4.2% from a year ago, which is the fastest rise since September 2008. With the updated report being released later this week, many investors are watching to see how the Fed will respond.

But how should you respond to the potential of rising inflation? Does it always signal bad news for the individual investor? Is rising inflation always bad?

On this week’s episode, Brandon and Justin discuss what inflation is, how it’s measured, and its potential impacts on your portfolio.

EPISODE HIGHLIGHTS

• Brandon and Justin discuss the latest market news (00:36)
• What is inflation? How does it impact us and our investment goals? (1:58)
• Consumer Price Index (CPI) vs Personal Consumption Expenditures (PCE) (3:13)
• “Some amount of inflation is actually good. It drives economic growth and development and it prevents people from just sitting on their money.” -Justin Dyer
• Inflation vs Deflation (4:23)
• Hyperinflation: When inflation becomes damaging (4:36)
• The current debate – is inflation here to stay or temporary? (5:29)
• “And the big debate in the marketplace is: okay, there is inflation, but is it going to be persistent? Or is this just a temporary spike in inflations that’s a result of the sugar high from money being printed to try and solve and deal with the problems from COVID?” – Justin Dyer
• The arguments from both sides (7:51)
• How we prepare and protect our clients against rising inflation (8:36)
• “We don’t have to predict inflation. We just have to be prepared for it.” – Brandon Averill
• Is inflation a bad thing for investments? (12:54)
• The bottom line (16:10)
• Read: How Does Inflation Impact Investors?