FINANCIAL BY SARAH SUYDAM
INFLATION-PROOFING YOUR INVESTMENTS
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I
Inf lation has been on the minds of many for quite some time
now, and it’s not hard to understand why. Whether it’s a grocery
can have on your portfolio returns.” Martin shares that in the current environment, she’s speaking
bill, interest rates or otherwise, most people are feeling the effects
more with clients about “real return” or “inf lation hedged”
of inf lation in some shape or form. The good news? There are some
investments to keep up with or outperform inf lation.
steps you can take to soften the blow. To learn more about inf lation-proofing your investments, we
“Some examples that may work for some portfolios include Treasury Inf lation Protected Securities (TIPS), Precious Metals
connected with Kimberly Lynn Martin, CPFA, C(k)P, CFP, CIMA,
(i.e. Gold), Commodities, Dividend-Paying Stocks, and Real
MIC, Senior Resident Director and Senior Vice President with
Estate,” Martin said.
Hammond, Martin & Associates in Muskegon. Martin—who began her career as a Merrill Institutional
She added that investors may consider prioritizing their emergency fund to ensure savings keep up with rising costs and
Consultant in 1989 and has received a number of accolades for her
placing those savings in a high yield savings account or CDs to
industry excellence—says the primary way an investor can protect
provide further protection against rising prices.
their finances from inf lation is through diversification across asset
“Regardless of the strategies used, an investor should always
classes, which can reduce the impact of market f luctuations on
remember to employ diversification, as that’s a key component to
one’s overall net worth.
reduce portfolio volatility, which can have a material impact on
“This is important to think about in the current climate
financial plans,” she explained.
because CPI (All Urban NSA) was up 17.76% on a cumulative basis
But what about inf lation’s impact on existing debt?
from January 1, 2021 to December 31, 2023,” Martin explained.
“When inf lation is at an elevated level, the Federal Reserve
“Over the same period, the S&P 500 Price Return index was up
increases interest rates, which raises the cost of debt,” Martin
26.99%, which equates to a real return of 9.23% when factoring in
said, adding this can also reduce an investor’s ability to repay
inf lation. This highlights the significant negative impact inf lation
their debt in a timely manner because a higher portion of their
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