According to leading economists, moderate inflation is a sign of a healthy economy, and citizens can bear it without any threat to their individual financial stability. However, a high inflation rate can disrupt all family financial planning and prove strenuous to everyone in the country.
However, we know every challenge has a solution, and the inflation challenge has some remedies to save your financial stability. Let’s learn at least five solutions to maintain financial stability during the high inflation period in Canada, particularly in Calgary, Edmonton, Lloydminster, & Alberta regions.
1 – Have Diverse Investment Portfolio
It has been observed that different assets respond differently to inflation; some are more sensitive, while others remain stable. Therefore, you must invest in different asset classes, such as bonds, stocks, commodities, and real estate.
All stocks will not droop during inflation. Some stocks will give you a good return. So, you can invest in Exchange Transfer Funds (ETFs) or a mix of stocks.
Treasury Inflation-protected Securities (TIPS):
TIPS are a kind of government bonds. They protect people from inflation. Therefore, its principal value is increasing with an increased inflation rate. So, you can keep pace with rising prices during inflation.
Real estate and valuable commodities, including gold, silver, diamond, oil, etc., remain less affected during inflation and provide excellent value when leading world currencies decline.
Thus, spreading your portfolio by diverse investments can save you from inflation-hit assets.
2 – Invest in Tax-efficient Accounts
Canadians can take advantage of tax-efficient accounts by choosing two options:
TFSA (Tax-Free Saving Account):
Income in TFSA is not subject to tax. So, your investment income and capital gains remain tax-free. Thus, your investment will grow without being affected by taxation.
Registered Retirement Saving Plan (RRSP):
The prime motto of RRSP is to support retirement savings with tax deductions. Thus, you can grow your investment with the least tax paying.
3 – Regularly Monitor the Consumer Price Index (CPI) in Calgary, Edmonton, Lloydminster, & Alberta
You can efficiently gauge inflation by monitoring changes in CPI (Consumer Price Index) in Calgary, Edmonton, Lloydminster, & Alberta. CPI measures the average change over time in the prices paid by urban consumers.
So, closely monitoring CPI enables you to make informed and wise investment decisions. You can adjust the budget when inflation goes high or low. You can reduce discretionary spending when it goes high.
4 – Financial Debt Counseling in Calgary
Having debt during an inflation period may prove dangerous to your financial stability because you will pay a big chunk of your income in paying debt, and the remaining will prove insufficient for your monthly budget.
5 – Debt Consolidation Loan
High-interest loans are disastrous in inflation periods to maintain your monthly budget. Credit720 provides better options to mitigate high-interest loans by setting debt consolidation loan instead of paying for different loans simultaneously.