Inflation-proof your investments now – 3 reasons why
April 17, 2024: Investors are being urged to ‘inflation-proof’ their investments for three key reasons by the CEO of one of the world’s largest independent financial advisory and asset management organizations.
deVere Group’s Nigel Green says a “failure to do so could detrimentally hit” your wealth.
He comments: “While inflation, the silent wealth killer, has come down from multi-decade highs in recent months, it still remains a major threat to the hard-earned assets of investors worldwide.
“With economic landscapes evolving amid geopolitical tensions, disparate growth dynamics, and diverging monetary policies, safeguarding wealth against the erosive effects of inflation should be a priority.”
The deVere Group CEO cites three main reasons driving his call to take inflation seriously.
“First, oil prices will stay high – even if Middle East tensions cool. The conflict between Israel and Hamas, the growing tensions between Israel and Iran, and Red Sea attacks have propelled oil prices upward.
“But it’s not just geopolitical tensions driving this surge. It’s also essential to recognize that economic growth dynamics in key regions like the US, Europe, and China are also exerting substantial upward pressure on demand.
“The disciplined restraint in supply management by the OPEC+ alliance adds another layer of complexity.
“This combination of heightened demand and controlled supply is a recipe for higher global inflation for longer, making it imperative for investors to adjust their portfolios accordingly.”
He continues: “Second, in the US, the world’s largest economy, the recent surge in supercore inflation, a more specific gauge that excludes shelter and rent costs, is of concern to investors around the world.
“This acceleration, reaching a staggering 4.8% year over year in March and exceeding 8% when annualized over the last three months, far surpasses the Federal Reserve’s 2% target.
“As one of the Fed’s preferred measures, this development which has implications for the both the US and the global economy, underscores the need for investors to confront inflation head-on and adapt their investment strategies accordingly.”
The deVere CEO goes on to add: “Third, investors face a growing divergence in expectations for interest rate adjustments between the European Central Bank (ECB) and the Federal Reserve, among other major central bank peers.
“In the US, it seems interest rates will be higher for much longer than anticipated, whereas in Europe, we could see the opposite.
“This disparity in monetary policy approaches poses both opportunities and challenges for investors in global financial markets.
“Working with an advisor, investors would do well to closely monitor monetary policy announcements, economic indicators, and geopolitical developments to anticipate market shifts and position their portfolios accordingly. Failure to adapt to evolving macroeconomic conditions could expose portfolios to heightened volatility, inflationary risks and miss out on key opportunities.”
It’s clear that although having come down considerably, inflation remains a major issue that wreaks havoc on investments which are not properly revised and, if necessary, repositioned.
“Inflation can silently erode your wealth if you’re not careful. Be on the front foot and seize the opportunities when they’re presented.”