What’s going on with inflation?

This question seems to be on the lips of every investor. As the world recovers from an unprecedented decline and rebound from COVID-19, savvy investors are rebalancing their portfolios to defend against inflation risk. Fortunately, the swiftness of the global recovery is unlike any in modern history. Unfortunately, the combination of strong global demand and central bank stimulus have resulted in the return of inflation. Financial planners are evaluating client portfolios and rebalancing to address this concern.

Rob DeHollander
CERTIFIED FINANCIAL PLANNER™ professional
Accredited Investment Fiduciary

There are reasons to assume inflation may stay elevated for a while. “Some assets struggle with increasing levels of inflation,” says Rob DeHollander, financial planner at the DeHollander Financial Group in Greenville. “However, certain assets actually perform well with inflation and adding some of these into your portfolio can help manage risk during these periods.” Plan for inflation by investing in asset classes that tend to outperform the market during inflationary climates.

DeHollander recommends considering assets such as gold, commodities, Treasury Inflation Protected Securities (TIPs) and real estate. “Consider taking profits from the post-Covid rebound, rebalancing your portfolio and reducing risk. The next 12 months will not be like the last 12 months. Including a diversified blend of these non-traditional asset classes has historically helped combat against inflation,” he says. He recommends investing no more than 10-20% in inflation hedges and advises taking care not to make large allocation bets.

His best advice? “Have a solid financial plan that’s built for turbulent times, rebalance accordingly and focus on your long-term goals.”

DeHollander Financial Group is a Greenville, South Carolina-based firm that specializes in Financial Planning and Wealth Management. DeHollander provides financial advice as a fiduciary using an objective, fee-based model.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.