How to protect your investments from inflation

Inflation is at its highest rate in nearly two decades, hitting 4.7 percent in November as gas, food and housing prices continued to rise.

It is understandable to be worried about your financial future when prices are increasing at such a rapid rate. Here’s how to shore up your investments to protect yourself from inflation.

“It’s on everyone’s mind right now,” said Ian Calvert, vice president and director of HighView Financial Group.

Calvert explained that inflation erodes your purchasing power over time, so you want your investments to at least keep up, if they don’t rise above it.

Those who have too much cash or guaranteed investment certificates (GICs) with low interest rates may not meet that goal, Calvert said, as the purchasing power of their cash will decline and interest rates on GICs are generally higher. lower than current highs. rate of inflation. (However, there are some GIC options that offer some protection against inflation.)

Inflation fluctuates in real time, but GICs and interest rates don’t always respond quickly, Calvert said.

At least in the short term, you won’t see interest rates immediately adjust for higher inflationary periods, he said.

Similarly, fixed income or bond investors can also feel the pain of inflation, Calvert said.

He recommends keeping a diverse portfolio, but also focusing your attention on “real assets,” such as real estate, infrastructure, or commodities.

However, he noted that commodities are volatile investments and offer no income, unlike stocks that pay dividends that can increase.

“If you have a portfolio of stocks and shares. . . Having exposure to equities during times of inflation can help protect it, while also receiving some dividend payments. ”