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Last time on Stewardology, we discussed the root causes of inflation, how it is measured, and whether or not it has an objective moral value “good or bad”. But all that information is useless unless we know what to do about it. So today, we will address the Steward’s responsibility when it comes to inflation.
As a steward, should I be worried about inflation? What should I do about it?
1. How to think about it? (Episode 12 – dangers of emotional investing)
- Trust in the Lord – He will provide
- Get the facts – Avoid hype and hysteria. Seek unbiased 3rd party information.
- Get wise counsel – This podcast can be part of that but you should also be seeking the advice of your other advisors.
- Sleep on it – Don’t make a knee jerk reaction. One often meets his destiny on the road he takes to avoid it.
“One often meets his destiny on the road he takes to avoid it.” – Jean de La Fontaine
2. What investments may work well in an inflationary environment?
- Stocks (especially large cap) may work well in a moderate inflation environment.
- Real Estate generally does well. Prices increase and so do rents.
- TIPS – treasury Inflation Protected Securities – then to help in an inflationary environment.
- Commodities – be careful
- Be aware of mark-ups on buying/selling coins and bullion.
- Also note the emotional sales tactics.
- Not always the safe haven that they are thought to be.
- Can invest in Raw material (coins) or MFs/ETFs based on raw materials.
- MF/ETF Caution – if values fall fast, companies may not have the ability to recover as their profit margin decreases.
- MF/ETF Advantage – easy to buy and sell with little to no cost. No risk of theft.
- Delegate Trust to an advisor to help steward your wealth through inflation.
3. What to Avoid?
- Large amounts in cash – losing money safely
- Long term bonds may struggle but bonds still have their place in the portfolio.
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