January 2022
Here are some thing investors should be aware of as we start the New Year.
1. Inflation—No longer broadly labeled transitory, inflation may be a persistent problem through 2022. Affecting all sectors of the economy, consumers are largely feeling its effects in energy and food.
What to consider before you make changes to your financial strategy:
Do not use inflation as an excuse to time the market time. Dipping in and out of assets designed to hedge inflation requires you not only know when to buy but also when to sell, and predicting the end of inflation requires a crystal ball. Market timing is not a successful strategy regardless of any current market trends.
My advice: Evaluate your total portfolio with a long-term perspective. Attention should be given to your current cash holdings. And remember, equities and real estate are historically good long-term hedges against inflation.
2. Continued Interest In Bitcoin & Other Cryto currencies—Partly driven by inflation, others investors view crypto as a longer-term investment. Given its volatility, it’s important to evaluate the use of crypto in your portfolio based on your own circumstances.
One caution: beware of the Bitcoin Exchange Traded Funds—these appear attractive to investors who do not want to go through the process of investing directly into Bitcoin, which requires opening a digital exchange account and remembering passwords. However, many of these ETFs only hold a portion of Bitcoin—and often in futures contracts—not the actual currency. Oftentimes they hold other asset classes such as treasury bills. So before investing make sure you understand how this particular strategy will work in your total portfolio.
3. Student loan repayment—The pause on payments and 0% interest has been extended from January 31, 2022 to May 2022. While May might seem far off, but it’s important to begin planning a repayment strategy now.
Wishing you a Happy New Year & many happy market returns.