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How Sortter Can Help You Fight Inflation

In the current high-inflation environment, it's become more essential than ever to lower its impacts. Inflation’s damage to everyday living and wealth can be reduced by following common personal finance advice.

The Producer Price Index, a tool to measure inflation in the U.S. by tracking average selling prices, increased by 11.2% between December 2020 and March 2022. That’s a lot for such a short period!

While such high inflation may be scary, it helps to know that there definitely isn’t an inflation rate record here. We have faced more brutal ones in the past. Thus, from experience, there are things you can do to effectively fight inflation regardless of how high it is.

Here, at Sortter, we want to help you do just that. This post will provide you with simple tips you can follow and free tools you can use for that purpose…

Let’s dive in!

If you wisely regulate your income and expenses, protect your emergency fund, and invest accordingly, inflation becomes much less of an issue.

1. Update your Budget

That may seem like advice applicable to every personal financial situation, regardless of the status of the economy. But it’s even more crucial that you spend time monitoring your budget during high-inflation periods.

So, take a look at your recurring expenses and try to identify those that can be reduced or completely removed.

Note: Since interest rates can be high in such times, you might be wasting the opportunity to advantageously refinance some of your debts (replacing them with lower-interest ones).

At the same time, you can invest in more education and consequently increase your income through a promotion, a better-paying job, or part-time freelancing.

2. Protect your Emergency Fund

As a personal finance concept, the emergency fund is a no-brainer for everyone. But its value rises during high inflation as you’re more likely to need it.

An emergency fund is supposed to be money set aside for use in emergencies. If you haven’t created one yet, use this guide to get started.

But simply having an emergency fund isn’t enough. Since it consists of cash in the bank, inflation can more quickly erode its value. And that’s why you need to protect it.

Having it invested won’t do because you will need to access it quickly if you’re in an emergency. The middle solution is a savings account with a high-interest rate.

The advent of digital banks has made it very easy to open such an account. But selecting the right one will depend on multiple factors, such as your residence country, preferred fee structure, additional services you’d like, etc.

For this reason, we created a free tool to find those banks that fulfill your criteria in a matter of seconds. No sign-up is required.

3. Create an Inflation Hedging Portfolio

During high inflation, investing is even more necessary for protecting your money’s value. But the circumstances that such a difficult period creates make some assets more appealing than others.

Here are some assets that hedge against inflation:

  • Consumer staples stocks (for stocks that aren’t included in this industry, but are household names recommended by analysts to fight inflation, check this post)
  • ETFs (intelligent selection is a key as much as diversification is; so here are a few ETF recommendations)
  • Commodities (oil, cotton, copper, gold, soybeans, etc are all commodities which are used to produce goods with rising prices during inflation)
  • REIT (Real Estate Investment Trust) stocks (prices of rent and, consequently, the value of real estate assets rise alongside inflation)

If you don’t have a brokerage account to have access to the above assets, make sure that you use our free tool that helps you find the right broker for you.

4. Consult with a Wealth Manager

At the end of the day, the best course of action during high inflation is to hire a wealth manager to offer advice.

Such a professional will see things that you can’t when examining your financial situation and they will suggest tailor-made solutions.

Of course, if you’re not a high net-worth individual, the investment in a wealth manager may not be justifiable.

Conclusion

As you can see, inflation is only as catastrophic as you let it be. If you wisely regulate your income and expenses, protect your emergency fund, and invest accordingly, it becomes much less of an issue.

Of course, you can do all these things in a faster and more efficient manner if a professional guides you. This would only make sense, however, if the cost of hiring one is a very small amount when looked at against your overall net worth.

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