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  • Writer's pictureBridget Sullivan Mermel CFP(R) CPA

High Inflation Money Strategy: Invest to Beat Inflation

Updated: May 12, 2022

Inflation is high; we discuss the strategy we both use to help clients understand and plan for it.

We haven't seen inflation figures like this in 30 years. Before figuring out your investment strategy, the first step is to look at the underlying emotions evoked by talk of inflation. The #1 question to ask yourself is: what is it that I’m ACTUALLY afraid of?

a. …of being dumb with my money?

b. …of not being able to afford things in the future?

c. …of running out of money because prices go up?

The second step it so look at the facts. That sounds silly, but the emotions that fear can stir up often lead us to a downward spiral of thinking, so it can be really helpful to step back from our feelings and look at the facts without judgement.

The third step is to act. The strategy both John and Bridget use to take advantage of inflation is to buy stocks, have a fixed mortgage, and buy I-bonds.

Check the minute marks:

0:40 Step One Understanding the emotions that inflation evokes :40

4:47 Step Two Take a step back and look at facts

4:477:34 Step Three Three actions to take to make sure your finances are set up to take advantage of inflation

Thanks for watching and please subscribe!


John: Inflation is at its highest rate in 30 years. It's kind of scary. What do we do about it? That's what we're going to talk about in today's episode of Friends Talk Financial Planning. Hi, I'm John Scherer, and I run a fee-only financial planning practice in Middleton, Wisconsin.

Bridget: I'm Bridget Sullivan Mermel, and I've got a fee-only financial planning practice in Chicago, Illinois. Oh, before we start talking about inflation, John, I want to remind people to subscribe. It helps us with YouTube and helps more people find out about us. So please subscribe.

John: That's great!

Bridget: So, John, I'm getting people asking me about inflation and people don't like inflation, I think, or some people don't like inflation, and it really triggers anxiety and fear in people. And so they want to know what are we doing about this.

John: It’s in the news. I mean that’s what you see, right?

Bridget: Yeah. And so what are we doing about this? And so I'm wondering how you talk to your clients about this.

John: Yeah. That’s a big question. I'm really glad to be talking about this today. And it’s that “What do you do thing?” It seems to me that inflation, it's got that sort of scary connotation, right? I got this fear. It evokes fear. It evokes an emotion. And then it sort of triggers, I think this…when there's fear, it's sort of fight or flight, right? I have to do something. And so I talk with people a lot about looking at what's the real question. Like, what's really driving this fear? I don't know if that's what you talk about with your clients?

Bridget: I try to work through the solutions. So I'm really happy that you're trying to get to the bottom of what the fear is, because I think that is really an insightful approach. So, it seems to me like the fear can be about “I don't want to run out of money.” That's one fear. That's kind of the bottom…ultimate fear.

John: Yeah.

Bridget: But in the meantime, people are worried about, “Well, what if something happens to my income from my job and prices keep going up and then it doesn't work out, and I run out of money?” That seems like something that smart people are thinking about.

John: Like…you're getting to the real questions, right? And as I think about it, who's actually afraid of inflation in and of itself? Well, no, it's not inflation, right? That raises rates on savings accounts and things and salaries go up. So it's not inflation is not it. It's those things that you were just talking about is, "Oh, no, I'm afraid of what if I can't afford my lifestyle in the future? What if I run out of money?" What if…some of these other things. Maybe when I was growing up, my dad lost his job and it was in a time back in the 70s when we had inflation and that triggers those sort of thought processes.

And so it's not necessarily inflation by it…Who's actually afraid of inflation, it’s those things that inflation can do. And I think it's really useful to ask yourself or to dig in, and that's some of the work we do with our clients is trying to find out what's the real question. What are we really concerned about? What's actually bothering you? Because it's usually not inflation. It's about some of those things that inflation maybe does or can lead to, or you have history with it. And those are the things that can be really useful to find out what's actually bothering you so that you can do something about it then, right?

Bridget: Right...right. And sometimes people want to do something about that with their financial planning. And there are things that you can do. But I have found that sometimes they're not satisfactory for people, because they don't feel like they're doing enough. They want to be able to fight or flight somehow. Like, they don't want to just see okay your overall portfolio is designed for these ups and downs of the stock market, of inflation, of the overall economic events, and your net worth is designed to be able to withstand whatever ups and downs come our way. And they want to take more action.

John: Yeah. It's that doing thing. And one of the things I think it's really important as we talk to sort of face the emotional side, right? It's not necessarily logical, right?

Bridget: Yeah.

John: Some of these emotions come up and they go, “Okay. What are those emotions I'm feeling?” And then I think it's useful to take a look and try to take a step back if you can and look at some of the facts. Because I know it's for me. I think for a lot of people, you have this, “Oh, here's inflation. Here's what it can do.”

And then you start to think about what maybe some experiences you've had or somebody you've heard about and then this sort of negative spiral. And then to say, “Well, listen, let's look at some of the facts on things.”

And one of the facts I talk about with people these days is inflation is higher than it has been in a long time, but we're just barely above the long-term average for inflation, right? You know we've had 20 or so years where inflation has been under the average, so at some point you go, “Listen, it's going to be higher.” And to think about it in long-term context, you go, “Oh, inflation now is not as bad as it was in the 70s” sort of thing, right? Okay. Wait a minute. I have some context.

And another thing I talk with people about is just what inflation over the last year, what the price of gas has gone up a dollar or something a gallon like, “Holy Moly. It's gone up so much.” But when you look back ten and 15 years, I mean, back in 2008/2009, the price of gas was, on average, was nearly $4 a gallon at one point before the credit crisis, right? So you got ten, twelve or fourteen years, and the price of gas is actually less than it was fourteen years ago or twelve years ago.

You think, “Wait a minute. Oh, that's right. I kind of forgot about that. I was thinking about last year in the middle of a pandemic,” right? And they go, “Oh, it kind of makes me feel a little bit…helps me to more objectively look at what's going on and less emotionally look at what's going on.

And so I think that can be really helpful to look at, number one is to recognize that this is an emotional thing, right? I mean, it is scary. Of course. ou look at prices jumping and think, “What do you do?” And then also to look at some of the facts. And maybe the facts are. “Yeah, Holy cow gas is worth twice...cost twice what it has ever cost.”

Or it could be one of those things where it's like, “Oh, Jeez, I guess in some fashions it's not quite as bad as I might have felt like it is." Reconciling the facts with the feelings, that can be just really helpful to balance out people's thinking of things. So those are two things that I think are really useful as you think about inflation in particular here.

Bridget: Right. And I think it's important for people to realize that their overall plan is what protects them against inflation. People…have specifically told me that they're hiring me to help them with their fears, like help them get out of reptile brain and into more long-term, integrated thinking and out of the fight or flight.

With that, though, we do have some specific suggestions to make sure that your overall financial plan includes these things, so that…to best protect you because there are some specific things that we suggest that do help protect you from inflation. The first is invest in stocks, and the second is have a fixed mortgage, and the third is our most popular item lately is invest in I Bonds. So, John, tell me more if you have any more to say on those.

John: Yeah. We talked about this in a recent episode, I think it was over the summer, about stock prices can...businesses can react to inflation quickly, so buying stocks helps, you know stock mutual funds. Having a fixed mortgage rates. We've got clients that are refinancing mortgages 3%, something like that.

If inflation goes up, suddenly your mortgage is paid off in cheaper and cheaper dollars over time. And then those I Bonds, right? Those adjust with inflation. Right now, they're paying 7% or something like that. I mean, it's a good deal. So some of those basics haven't changed and circling back, I guess that's probably a good place just to sort of wrap things up.

If you feel yourself worrying about inflation, you read these articles. Number one, ask yourself, what are you really afraid of? What's really bugging you? It's not the inflation. What's underneath that? That can be really helpful to take control of this.

And number two, look at some of the facts, like what are the facts that are driving? Does the reality that you can find reflect your fears? Or is there maybe a disconnect that's helpful to look at? And then, as you just said, Bridget, your portfolio and your investments. Always be diversified in things. Have some I Bonds; have a fixed mortgage; buy stocks; and prepare yourself no matter when there's good times and bad times out there.

Bridget: So with that, let's wrap it up. I'm Bridget Sullivan Mermel, and I have a fee-only financial planning practice in Chicago, Illinois, and I'm with John Scherer, who's in Middleton, Wisconsin. We're both members of ACP, or the Alliance of Comprehensive Planners. If you like how we talk about this stuff, there's advisors nationwide that share our values and think about things much the same way.

John: That’s right. You can find an ACP planner near you at and remember to hit that “subscribe” button. So, until next time, Bridget. Thanks!

At Sullivan Mermel, Inc., we are fee-only financial planners located in Chicago, Illinois serving clients in Chicago and throughout the nation. We meet both in-person in our Chicago office and virtually through video conferencing and secure file transfer.

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