Investing in the stock market during times of high inflation

CAPE GIRARDEAU, Mo. (KBSI) – During times of high inflation, having a diversified investment portfolio can put you in an advantageous situation financially. 

“Not all stocks are mad equal, and everybody’s own personal financial situation is different,” wealth advisor Sam Schwartz said. “If I’m somebody who is struggling to make ends meet a little bit, it’s just about having choices at the end of the day.”

Schwartz said how exactly to go about diversifying that portfolio is based on a few factors. 

“My appetite for risk, my age, my time horizon, and my goals – that’s where it kind of comes back to having a plan in place and focusing on the right behaviors,” he said.

Schwartz said having that plan in place can help lessen the blow of a tight financial situation. 

“For people who are maybe in a bit tighter of a position, it’s about trying to identify what your goals may be, whether it’s thinking about retirement, or a second home, or a vacation, or a kid’s education,” he said. “Odds are, it’s not an ‘and’ conversation, it’s an ‘or’ conversation.”

Prioritizing is also an important component to the investment equation. 

“Get your emergency funds squared away first, then begin thinking about a diversified portfolio of stocks and bonds and maybe a little bit of cash,” he said. “Maybe you want to think about some dividend stocks in particular.”

With inflation rates at over 8 percent, Schwartz said it may be time to think about what to do with any excess cash you may have.

“What we’re observing is that people who are a bit nervous [about investing] may actually be hanging on to excess cash,” he said. “If you have cash on the sidelines, what we’re talking to folks a lot about right now is it might be a good time to deploy that cash.” 

Schwartz said if you are able, set aside a certain amount every month to invest to give yourself peace of mind. 

“If you can stomach it, if it’s not too tight right now for you, if it’s a hundred bucks a month, 500 bucks a month, whatever it may be, it just automatically comes out and gets invested so that you don’t have to be thinking about, ‘Is this the right time?’” he said.

Schwartz said, especially if money is tight, making high risk investments would not be wise right now considering the stock market’s volatility. 

“I would be very cautious of trying to put high conviction bets on single stocks if that was all that with the kind of ‘get rich’ mentality because we think that’s not having a disciplined approach, and that would be very high risk,” he said.

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