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The impact of inflation on personal finances

Inflation can pose challenges to personal investments, but with the right strategies, AWM can help protect and grow your wealth. Diversifying your investment portfolio (such as in AWM investment portfolios) is a key strategy to mitigate the effects of high inflation. By spreading your investments across different asset classes such as equities, real estate, commodities and inflation-protected securities, you can reduce risk and increase the potential for positive returns.
 
Inflation erodes the purchasing power of your money over time. To counteract this, consider investments that tend to perform well during inflationary periods. Equity investments in companies with pricing power can be resilient in inflationary environments. 
Managing money in retirement
 
By selecting assets that can maintain or even outpace inflation, we can help preserve your purchasing power and ensure long-term financial stability.
 
Fixed-income investments are vulnerable to inflation as rising prices erode the real value of future cash flows. However, inflation-proof bonds such as inflation-linked government bonds can provide a measure of protection against rising prices. By including these bonds in a diversified portfolio, you can safeguard your wealth and preserve the real value of your investment.
 
High inflation can disrupt the performance of different investments in your portfolio. Regularly reviewing and rebalancing your portfolio ensures it remains aligned with your financial goals and risk tolerance. This involves selling overperforming assets and reinvesting in those that have the potential to counteract the impact of inflation. By maintaining balance, you can position yourself for long-term investment success. At AWM, our investment portfolios are rebalanced quarterly and our CBAM discretionary portfolios include adhoc trading even within that period in order to be able to action portfolio trades at the best opportunity.
 
To further diversify your portfolio and potentially enhance your returns, consider exploring alternative investments such as commodities, structured products, or private equity/lending. These investments can provide exposure to assets that may perform well during inflationary periods and offer unique avenues for wealth preservation and growth.
 
Navigating the complexities of high inflation requires knowledge and expertise. Seeking guidance from a qualified financial advisor or investment professional can provide valuable insights tailored to your financial goals. Their expertise can help you make informed decisions, adjust your investment strategy as needed, and maximize your potential for success.
 
At AWM, we stand ready to assist you in any and all personal finance matters that you may wish to enquire about. Feel free to ask us today for a free initial consultation.

Written by: Sam Hallett

Date: 30 June 2023

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