Financial advisor, Ashley Hicks, shares what you can control when inflation seems out of control

RENO, Nev. (KOLO) – We’ve all seen the headlines – inflation is high, but what does it really mean?

Edward Jones’ financial adviser, Ashley Hicks, is Morning Break’s new monthly contributor. The Dollars and Sense segment of KOLO 8 News Now hopes to make long-term financial planning and investing easy to understand and accessible to everyone.

On Friday, Hicks explained why inflation was really necessary. Excessive spending can have a negative impact on the economy, which is why the Federal Reserve will raise rates in order to slow down the spending of the economy. When it comes to thinking about inflations, Hicks said don’t focus on the things you can’t change;

Instead, here are some things you can focus on:

  • Your ability to define your goals and establish a financial plan. – One area where you have complete control is your ability to set your goals. Like most people, you probably have short-term goals — like saving for a new car or a dream vacation — and long-term goals, like a comfortable retirement. Once you have identified your goals and estimated how much they will cost, you can create an investment strategy to help you achieve them. Over time, some of your personal circumstances will likely change, so you should regularly review your time horizon and risk tolerance, adjusting your strategy as needed. And the same goes for your goals. They can change over time, requiring new responses from you in the way you invest.
  • Your answer to the shenanigans of the world and those market drops. – When the market falls and the value of your investments falls, you may be tempted to take immediate action to try to stop the losses. It’s understandable. After all, your investment results can have a big impact on your future. However, acting in haste could work against you. For example, you could sell investments that still have strong fundamentals and are still suitable for your needs. If you can avoid decisions based on short-term events, you can help yourself in the long run.
  • Your commitment to invest. – Financial markets are almost always in motion and their movements are difficult to predict. If you can keep investing in all markets – good, bad, or sideways – you’ll likely make much better progress toward your goals than if you were to periodically take a “timeout.” Many people turn away from investing when the market crashes, only to miss the beginnings of the next recovery. However, by investing regularly, you will increase the number of shares you hold in your investments. The larger your stake, the greater your chances of creating wealth.
  • The level of diversification of your portfolio. – Although diversification itself cannot guarantee profits or protect against all losses, it can help to significantly reduce the impact of market volatility on your portfolio. How you diversify your investments depends on many factors, but the general principle of maintaining a diversified portfolio should govern your approach to investing. It’s a good idea to periodically review your portfolio to make sure it’s still well-diversified.

The world will always be filled with unpredictable and uncontrollable events, and many of them will affect the financial markets to one degree or another. But in your own investment world, you still have a lot of control. You have the power to keep making progress towards all of your important financial goals.

To learn more about Ashley Hicks and her services at Edward Jones, click here. You can also find her on Facebook and LinkedIn.

Geraldine L. Melton