Retirement investment strategies to consider as inflation rises

Crewe Advisors Partner and CFA Louise Goudy Willmering joins Yahoo Finance Live to discuss investment strategies to help those saving for retirement battle inflation.

Video Transcript

JARED BLIKRE: Welcome back. Inflation has been red hot. We’ve got CPI clocking in at 8 and 1/2%. Input prices at 11.2%, the most in four decades. And for more insights on how investors can manage the rise in inflation is Crewe Advisors partner Louise Goudy Willmering, CFA. And Louise, good to see you here today. What can we do about this precious inflation that we are all now up against?

LOUISE GOUDY WILLMERING: Well, we are certainly up against inflation. We’re seeing it just about everywhere after many years of an accommodative Federal Reserve policy. They’re trying now to tamp down the prices of the things that we all pay. And certainly, the market is nervous about how that will impact earnings and companies going forward. There are a couple of things that I think would be really easy to do in a portfolio, but certainly keeping in mind that it’s better to be a long-term investor than just a trader.

I think I bonds are a really interesting investment for everyone. Certainly, there are some restrictions like those $10,000 per Social Security number. But if you can earn upwards of what will most likely be upwards of 9% starting in May, with a federal government guarantee, I think that’s something that we should look at. That’s an underlying interest rate with a change based on the CPI every six months. So that’s a great way to kind of lock in a nice return that is inflation adjusted without a lot of principal risk on the bond side. In addition, I think– sorry. I’m sorry.

BRIAN SOZZI: Now, well, should you– if you’re in retirement currently and you’re having your inflation– your retirement savings eaten by inflation, do you allocate more money to stocks?

LOUISE GOUDY WILLMERING: I think it depends on how much you’re taking. Certainly, you can’t absorb the risk in the short term. I think it is necessary to make sure that you have enough money for the next six months to a year on hand to kind of weather those shocks. But certainly, stocks have been a good way over time to protect the purchasing power of the assets that you have. So I do think a balanced mix of stocks, making sure that you have enough liquidity on hand to take care of short-term shocks is a great way to go.

JARED BLIKRE: And Louise, just looking at your stock investments here for the average investor, for the average investor, if you happen to be in energy, you’re doing great this year. It’s up 40%, not a lot else going on. We’ve seen these high growth sectors really take hits. Just wondering, where should the average investor be looking sector wise or style wise to put their money?

LOUISE GOUDY WILLMERING: Well, certainly, energy has done terrific this year, but over the past several years, it hasn’t done so well. So while I think the most important thing is to make sure that you are diversified among the sectors of the economy and making sure that what you have is a good long-term basket of diversified holdings, certainly, there are dividends that would help with income and many of the sectors.

And I think areas like health care, financials, utilities, and energy, to a certain extent, all play a component. I don’t think you can necessarily trade in and out. I think it’s better to have a good long-term diversified view of the world and pick those companies with solid balance sheets and established sectors.

JARED BLIKRE: It sounds like Twitter right there. OK, I kid. I kid. We have to reference Twitter in every single story here. Great to be with you here, Louise Gowdy Willmering, Crewe Advisors Partner, CFA.

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