It’s time to be realistic about inflation and recession and the fact that it just got harder to achieve your financial goals. The Fed raised the federal funds rate this year, taking the percentage to new highs. To compare, it was near zero at the end of last year. High prices are eating into people’s budgets and bank accounts, and the challenging economy should be prompting you to examine your long-term financial plan.

Now is the time to have an honest conversation with your Financial Advisor, and ask the following:

1. What strategic steps can I take now to protect my nest egg? Some options:
   1. Start to pay off high interest rate debt.
   2. Track your household spending and look for savings
   3. Cut anything which has a monthly fee that you don’t use anymore.
   4. Hold off on impulse buying for now.
   5. Replenish that emergency fund if depleted over the last few years.
2. How much will inflation impact my cash flow? Our answer:
   1. Determine your personal inflation rate, for some it is higher because there is almost no room left to cut expenses or save.
   2. Remember inflation shrinks your purchasing power, and your assets may be worth less in the future. Start to plan ahead for necessary big purchases or maintenance items which may grow even more expensive in the next few months.
   3. Having a great deal of cash in the bank during inflationary times only erodes your wealth, especially at these high inflation rates.
   4. When looking for a raise or bonus, remember when you ask that a 7-8% increase leaves you basically even.
3. Is my portfolio diverse enough for this economy? Consider this:
   1. If you got comfortable during those good market years it might make sense to reevaluate your risk tolerance.
   2. Don’t make emotional decisions, if your strategy was to diversify smartly, then stick with that plan for your portfolio.
   3. Look for investments that do well in inflationary times, for example the energy sector is a good place to look for inflation-resistant stocks.
   4. Also consider income-producing investments such as real estate or dividend stocks.
   5. Take a look at investments designed to provide inflation protection like Treasury Inflation-Protected Securities and inflation-protected bond funds.
4. What might be the trigger for a change of direction? Be cautious in the face of red flags:
   1. Sometimes the best action is to take no action.
   2. The 60/40 mix of stocks and bonds right now is doing what it was meant to do – trade a high return for a moderate return while also trading a lot of risk for much less risk.
   3. A 40/60 mix may make sense for right now if the yields you find in fixed income are more attractive than equities.
   4. How much interest rate exposure do you want to have?
   5. Look for small wins, manage risk, and stay diversified.

CONTACT US: The TFG financial advisory team will work with you to help you build a tax–efficient, well-diversified portfolio, allocated and tailored to a difficult market. Feel free to contact me, Cory Lyon, Financial Advisor, directly at 561-209-1120, with any questions regarding financial planning in inflationary times. TFG Financial Advisors offers a complimentary, no obligation assessment of your financial goals and what opportunities exist to help you achieve them. At TFG, we believe in customized investment portfolio design and personalized asset management. I act as a fiduciary for my clients.

TFG Financial Advisors, LLC is a registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities, and past performance is not indicative of future results. Investments involve risk and are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here.