Inflation Implementation: How to Scale Your Paper + Portfolio
Inflation is Up and Stuck ( At An All Time High)
Throughout this pandemic we have heard, seen and felt that impact of the word inflation. People have been inspired to leave their jobs at the cusp of The Great Resignation on to folks feeling like this being the Great Recession. While I covered some ways to move during The Pandemic Paper Series, I wanted to drive this a bit narrower due to seeing how we are now seeing inflation giving very much roaring ‘20s. Could history repeat itself, maybe. Could you prepare yourself, yes.
One of the comments that I have been seeing is that you will not get ‘rich by saving’ yet, the context that many fail to give what it was supposed to have gave is that many people oftentimes don’t have much to save. We’ve talked about this many times via my posts on social media. When inflation gives high-fives to 30-year highs and hasn’t risen this quickly since 1990, many people are unsure of how to move with their paper or portfolio. Folks who had smaller checks are seeing it go faster than normal due to the cost going up. Oh, that’s not get into how the supply chain is breaking the chain of big box stores like Tasha Cobbs- Leonard.
Recovery + Reset
I felt at the beginning that the “recovery” from this pandemic was going to be beyond any letter in the alphabet beyond L or W, yet cursive due to the changes that consumers + companies were going to have to make. Those decisions were going to be tough, yet tactical to help shift to help shift happen. I’ve made commentary about this recently over on Public, especially around the lately company splits. Also, seeing how companies such as Peloton + Zoom who were up and stuck at the beginning of the pandemic going through forecast shakes to help shape their next phase of growth is causing retail investors to feel “eh” about their long-term impact. I called this pandemic a “Great Reset” and it keeps being confirmed through various churns of the notch. So, how can you help keep your paper and portfolio from getting tagged by inflation? Let’s walk through some options -
Shifting your savings account + amount: You know how I feel about regular savings! You barely get any interest for tucking away your stacks! Even though High-Yield Savings APY has dipped through the Feds cutting the Federal interest rates, I still stand beside them. There are several that you can stack within, and I highly recommend Marcus by Goldman Sachs. Going back to the notion of ‘you can’t get rich by saving’, you can save to purchase assets or to build collateral to use OPP (Other People Paper) to obtain assets. To tell people who don’t have the cash flow, yet, that they can’t get rich by saving is a bit lacking. I digress. Stack up, but make a plan for it. Of course, beef up your F*ck it Fund + Opportunity/Emergency Funds, respectfully.
Investing or leveraging TIPS (Treasury Inflation-Protected Securities): This is a type of Treasury Bond that is indexed to inflation and helps against what we are witnessing now. The core principle of this type of bond is that you will never receive less than what you invested. It also rises as inflation rises while the interest payment varies with the adjusted principal value of the bond. The ting with these is the taxes will be higher if you decide to ride this ride. And they can be volatile. Just be mindful for how long you hold them. A good example of this would be Series I or I-Bonds. You can purchase securities here. They are likely to hold their rate until April 2022. (5/9/2022 - Update, the rate looks to be locked in for another 6 months at least @ 9.62%) What I like about them is that that portion is fixed and the other portion is varies to inflation. But it’s updated every 6 months! Keep in mind that you have to hold bonds for a least one year before you redeem them and depending on the type you might see a penalty for early withdrawal (3 months interest).
You know I was going to say it -- Stocks: Investing has been the ting especially within the pandemic, and for right the markets aren’t really impacted by inflation. The key there is right now. What I would caution you is to tap in with diversification and risk within your portfolio holdings. Knowing what’s going on, watching earnings and moving correctly. Compared to TIPs, ETFs are a solid way for investors to invest through any volatility that we could stand to see over the next 18 months or so. These types of stock allow you to grab many for a set price, but be mindful of this. Along with that, I do see some hot spots for investing being EV (Electric Vehicles), Clean Energy, FinTech , CyberSecurity, Energy, Government to carry these moves out, Infrastructure , and others. While I’ve been keeping my email list locked and loaded throughout this, here are some stock to research and level-set within your portfolio: $PAVE, $CAT, $NUE, $VMC, $ERTH, $GBLD, $ICN — among others. Keep in mind that you can see cash through dividends and capital gains. Don’t forget to make sure your retirement holdings aren’t holding you back. Even Fractional Shares can see reach! One of my favorite platforms to purchase stocks is Public Invest! Grab a free slice of stock on me!
HomeStacks: Real Estate/ REITs: Right now, if you can swing some Real and the Estate - this might be the time to do it. Mortgage rates are the best they have been since another tough time. If you aren’t in the position to purchase yet, look into REITs to still get into investing. I talked about these in detail and how you can see dividends on the monthly - if that’s one of your financial goals. Leverage where you can, Fam. Here’s a great article about them!
Here’s the latest hit Barry Bonds - Short Term Bonds: Depending on your financial objectives such determines in which you maneuver your money. While I talked about I-Bonds, you can also get them in a ETF as well. Some good options - $GVI, $SLQD, $SPSB.
Cash Commodities: These have been booming especially during the pandemic. Here are the top 10:
Crude Oil
Coffee
Natural gas
Gold
Wheat
Cotton
Corn
Sugar
Silver
Copper
You can look into companies or ETFs that align with any of these to see how to align these within your portfolio or see how they will impact your paper when it comes to the cost of them. Especially the first one, yet there is an ETF that has been crushing it!
Cryptocurrency Coint: If you’ve been following on IG, Public or Twitter - you know that I have been slow walking this within my platform. I first started my love affair with Crypto in 2017 with Bitcoin and was employed by a financial institution that was in talks for their own token (only to pull the plug on that soon after). While some feel that Crypto is a fad, to see companies, countries and cities add it within their form of payment or infrastructure shows me that it isn't going away. While I will start talking about this more, I will start with saying you don’t have to have the full price of the coin to see the impact. Think of it like Fractional Share. Buy bits and pieces with what you can. Some of the massively adopted ones as of lately are Bitcoin, Ethereum, Cardano, Matic, NFTs, DAOs, etc.
Crowdfunding Capital: I wrote an article around this topic before and it wouldn’t be me if I didn’t add this back into the chat! What Crowdfunding allows is for people who aren't Accredited Investors to invest in start-ups and companies listed on platforms like StartEngine and Republic. Along with businesses to gain capital (cash) in the process. This will then allow investors to get in Pre-IPO to potentially see major kick back like Jodeci in the desert.
Get your worth - Negotiation: This can go for anything for your job to your bills and beyond. When it comes to your job, ask for more internally or externally. Don’t be afraid to look again when it comes to jobs outside of what you’ve known. Always look to boost your ask at least 20%+ if not more. The reason why I say this is if your job gives you a bump fo 2% , but inflation is hitting your check at 6% — you might feel or see your check not checking for much. Getting paid more to buffer for the inflation along with pocketing more will help you implement what I shared above. Also, there are certifications you can get online and for free that align with your next step. Over to your bills, doing an audit isn’t just for budgeting but for saving money. Making sure you are getting the best rate for where your cash is heading. Don’t be afraid to call them up and state your case on how you need to be paying more. Just saying. Couponing still saves, B.
Things To Keep In Mind
Between volatility, tapering, inflation and a cluster of things going on at one thing - it can be a LOT! Make sure you are researching not only your options, but what you are currently doing. Use March 2020 as a baseline for your strategy. While I don’t think that we will back to those levels again, but gives us some insights on what to expect vs the recession. Market Exposure, Risk and Positioning are all important to staying Funds Focused during this Funnel of Foolery. With Tapering happening in 2022 while we are seeing Inflation not going anywhere, it’s good to get ahead of planning. Here’s some questions around what I just mentioned:
Market Exposure: If you have a Retirement Fund or Portfolio - This gives you an idea of what you can lose from particular investment or asset. This is why knowing your risk tolerance and asset allocation is important. Is a good bit of your retirement holdings in the international markets? Watch how they are moving? Within your portfolio — are you heavy tech? Would a massive correction pull your value down? What would hold during any volatility?
Risk: Can you handle the markets in a mess? ETFs might be for you! And for cryptocurrency, those coins holding a strong market cap and adoption might be a good look. Lessen your risk during this time. Things can shift at a seconds notice.
Positioning: I could say about asset allocation, but I’m going to flip back to the first paragraph - do you have cash reserves to gather deals when things happen? During times like this, the affluent often unload high to pick up when assets go low. While some say saving will not make you rich, it will help you position your your livelihood in case things happen and leverage to build with opportunities show. Just saying.
Positioning 1B: Always be auditing the holdings you have. Determine if they are holding value and if the volume in which you are holding makes sense. Always peep your watchlist during ‘red’ days to see how they are moving. Don’t be afraid to change the % on those funds in your portfolio.
I love to say “Audit Your Wallet” - but this goes for your bank accounts, retirement, portfolio and financial goals. Know where you are , where you want to go and how you can get there during this uncertain time. Don’t let the news make you neglect your progress.
Implement Your Own
These are just some high-level things you can be doing to help move and shake through this high inflation. Will it go up even more, I hope not. But I am watching to see how The Federal Reserves moves in the months to come. There was so much progress and light shown on how the stimulus helped people, I don’t want us to see a regression in any capacity. Like I love to say - Protect your neck. And how they feel like the stimulus hurt the economy, but the statistics state otherwise. It actually IMPROVED poverty levels! Many see tapering as a way to recorrect the wheel, but will it make us drive straight or feel like we’re going off-roading?
Which have you been implementing? No matter what happens as we go through this inflation, you can use a combination of these or wash/rinse/repeat to curate your own stride as we ride this tide. Don’t let the headlines scare you Fam, we’re going to make it!
