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Dealing with difficult times. Inflation, Rate Hikes, War

RL111 - Dealing with difficult times. Inflation, Rate Hikes, War


Today on the Retirement Lifestyle Show, Roshan Loungani, Erik Olson, and Adrian Nicholson talk about how today's investor is handling the Ukrainian war, rate hikes, inflation and other major threats targeting their portfolio. They discuss supply chain concerns, how to make portfolio adjustments during uncertain times, and the link between rate hikes and high inflation.


[05:10] Investing During Uncertain Times

[06:15] Why it Can Be a Challenge to Invest During Uncertain Times

[09:06] Randomized Approaches and Lower Rates of Returns

[15:30] How and When to Make Adjustments When Necessary

[17:14] How Inflation Might Influence Your Retirement Plans

[18:52] Supply Chain Concerns and Inflation

[21:30] The Great Resignation and Government Spending

[25:30] Pent Up Spending and the Risk of Inflation

[27:13] What is Sticky Inflation?

[32:10] Asset Classes That Perform Better During Inflation

[34:50] The Benefits of Having a Diversified Investment Strategy

[39:58] Interest Rates and What That Means To Your Investments

[44:01] Understanding High Inflation and Rate Hikes

[46:06] What History Says of High-Interest Rate Environments

[51:45] Bond Market Response to Inflation

55:40] Russia's Invasion of Ukraine

[01:01:06] Summary

[01:03:11] Parting Thoughts


For more links and the full show notes keep scrolling down!


Roshan Loungani can be reached at roshan.loungani@aretewealth.com or at 202-536-4468.


Erik Olson can be reached at erik.olson@aretewealth.com or 815-940-4652.


Adrian Nicholson can be reached at adrian.nicholson@aretewealth.com or at 703-915-8905.


For links to your favorite platform like Spotify, iTunes and so on go here:

https://anchor.fm/roshan-a-loungani/episodes/RL111---Dealing-with-difficult-times--Inflation--Rate-Hikes--War-e1gpbue

Select episodes, like this one, can be found on YouTube:

https://www.youtube.com/channel/UC0ZZPM3xk6onXNpb1ceAkCg




Follow Us At:

Podcast Website: https://www.retirementlifestyleshow.com https://www.retirewithroshan.com https://youtu.be/hKVzI87v0tA https://twitter.com/RoshanLoungani https://www.linkedin.com/in/roshanloungani/ https://www.facebook.com/retirewithroshan/ https://www.linkedin.com/in/financialerik/ https://www.linkedin.com/in/adrian-nicholson-74b82b13b/ #retirementlifestylepodcast #fire #podcast #FI #Retire #retirewithroshan


Full Show Notes:


War, Rate Hikes, and Inflation: Investing During Uncertain Times

Investing has never been easy, yet it seems like right now is probably one of the worst times to be an investor in the US. If you think about it, Americans are confronting at least four significant challenges outside their control. We are not yet fully out of the pandemic inflicted consequences; there's the generationally high inflation to worry about, interest rates are set to rise, and if that's not enough, Russia then decides, you know what, let's invade Ukraine. So, how do you as an investor react to all these uncertainties? Has your financial plan been built with allowances for these challenges, or is it based on overly optimistic assumptions?

Any time you invest in something, you're essentially putting your money at risk, so the inherent levels of uncertainty mean that you never know what to expect. However, when unprecedented threats such as war or recession arise, the level of uncertainty increases significantly because now companies can no longer predict future outcomes. And while it's impossible to predict what will happen when all of this is over, many of the same investing principles still apply today. Moreover, sometimes it doesn't matter what you choose to do during uncertain times, but we all know you can't go wrong over the long term by keeping yourself well-informed and taking advantage of opportunities when they arise.


Understanding High Inflation and Rate Hikes

Interest rates and inflation are like two peas in a pod. They tend to move in the same direction simply because the Fed likes using interest rates to combat inflation. So, if inflation is on a high, then the Fed raises interests to try and manage the inflation. If you're like most people, you probably don't understand how high-interest rates lower the risk of inflation. But what happens is that the Fed often responds to elevated inflation risks by raising its benchmark federal funds rate. When this happens, it effectively increases the level of risk-free reserves available to banks and other financial systems, limiting the money supply available for purchases of assets. Financial institutions then respond by increasing borrowing costs and rising interest rates to discourage consumer and business spending.

All in all, sometimes the inflation mindset can be more dangerous than market movements. Most times, people's expectations about future inflation are actually a driver of inflation. So if a series of events happen that make inflation a possibility and people believe that inflation is on its way, then inflation will undoubtedly come knocking.



All opinions expressed by podcast hosts and guests are solely their own. While based on information that they believe is reliable, neither Arete Wealth nor its affiliates warrant its completeness or accuracy, nor do their opinions reflect the opinion of Arete Wealth. This podcast is for general informational purposes only, and should not be regarded as specific advice or recommendations for any individual. Before making any decisions, consult a professional.

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