Alpine Bank Wealth Management Q&A with Melissa M. Knutson, CFP®, Vice President
The economy is on the rise due to lower COVID infection rates, stimulus spending, and low interest rates, resulting in inflation. Everyday expenses, such as groceries, health care, gas, and rent, are becoming more expensive. With inflation rising at an average of 3% annually, it’s important to have a strategy to maintain purchasing power.
Cash in the bank is a safe place to store your money, but it’s also important to keep in mind that too much cash can lead to a decline in purchasing power. If inflation is at 3% and your savings account is earning only 0.03%, you’re losing 2.97% of purchasing power every year.”
Bonds can provide stability and consistent income, but fixed income investments may not be enough to fight inflation as interest rates are expected to increase. Consider bonds with shorter maturities or Treasury Inflation-Protected Securities (TIPS) as part of your savings.
Stocks offer the greatest growth potential, but also come with greater risk. Long-term investing in a diversified quality equity portfolio is one of the most effective ways to combat inflation risk.
Talk to your wealth management advisor to ensure your goals are still feasible and review your current asset allocation—ideally a mix of cash, bonds, and stocks—to determine your most appropriate individual strategies today, to fight inflation tomorrow.
Contact Melissa Knutson to learn all that Alpine Bank Wealth Management can do for you. Call her at 877-808-7878 for assistance with wealth & personal banking.
Products of our Wealth Management service are not FDIC insured, may lose value and are not bank guaranteed.
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