Did you ever hear your parents or grandparents talk about how much less everything used to cost? They weren’t exaggerating – in 1960, a gallon of conventional whole milk was 31 cents, and today it’s $3.77 on average.1 A few dollars might not seem like much, but that’s a 1,116% increase. You’ve likely noticed higher prices recently, even if they aren’t 1,116% higher. Unfortunately, you can’t stop inflation. But you can prepare by working to protect your money from inflation.
How Much is Inflation Costing You?
In March alone, U.S. gas prices rose by more than 18%. Year-over-year, the price of gas soared by 48%. Energy costs increased 32% over the last year, while food prices rose by 8.8%. It was the biggest increase in food prices since 1981.2 You’re likely wondering how you can work to protect your money from inflation. Cutting back on spending isn’t always an option – you still need to get where you’re going in your car and buy food. The Federal Reserve is raising interest rates in an effort to curb inflation, but no one knows when it will work. In a time of rising interest rates and high inflation, know how you will respond.
Prepare for Inflation
While there is no single “magic bullet” cure for inflation, there are many strategies available. One potential strategy is buying Series I Savings Bonds. These are bonds issued by the U.S. government that are adjusted for inflation. The interest rate is a combination of a fixed rate that stays the same for the life of the bond and an inflation rate that is set twice a year. They are currently paying a 9.6% interest rate through October.3
The duration of these bonds can range from one year to 30 years, but you will forfeit the last three months of interest if you sell them before five years. Series I Savings Bonds are considered very low risk and are not subject to state or local taxes. Interest is tax-free if used to pay for qualified educational expenses.4 However, you can only buy up to $10,000 per year.5
For more information on I bonds, visit the U.S. Treasury website [https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm].
A Multi-Strategy Approach to Inflation
Beyond Series I Savings Bonds, there are many other investment options if you are looking to help protect your money from inflation. Not every strategy will be right for you, and it’s hard to know which ones will be. Our team of Financial Architects can look at your unique financial situation and help you consider strategies that fit your needs. Our full-time job is helping people protect and grow their money. Click the link below to schedule a time to come speak to us about your financial concerns so that we can get started on a plan to help you prepare for inflation.
Complimentary Consultation with Eric Scott Financial
Sources:
- FM_Retail_Price (usda.gov)
- Consumer price inflation hit a new 40-year high in March – CNN
- Can a Series I Savings Bond Help You Beat Inflation? (yahoo.com)
- Tax Advantages of Series I Savings Bonds (thebalance.com)
- Can a Series I Savings Bond Help You Beat Inflation? (yahoo.com)
Disclosure:
Investment advice is offered through APO Financial Services, LLC (“APO”) 10155 Westmoor Drive, Suite 175, Westminster, Colorado 80021-2627. APO Financial Services is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration with the SEC as an investment adviser should not be construed to imply that the SEC has approved or endorsed qualifications or the services Eric Scott Financial and/or APO Financial Services offers, or that its personnel possess a particular level of skill, expertise or training. Additional information pertaining to APO’s registration status, its business operations, services and fees, and its current written disclosure statement is available on the SECs Investment Adviser public website at https://apofinancial.com/disclosure/.
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