Ken Morris: The dark cloud of inflation hangs over everyone

During these times of economic uncertainty, as you battle inflation and a volatile, downward trending market, it's difficult to find any rays of sunshine.

If you're in the process of purchasing a home, significantly increased mortgage rates will add a lot of money to your monthly payment. So even if you do find your dream house, that mortgage interest is blocking out the sun.

If you bought a home just prior to rate increases, however, you're probably feeling good that you locked in a low mortgage rate. But wait! You might not feel quite as good when your property taxes take a jump due to inflation and the appreciation of your home value. So, no real sunshine in the property taxes arena either.

If you've been doing any shopping lately, you're aware of higher prices on just about everything. If you used a credit card and didn't pay the entire balance, you may have noticed that the interest rate on the unpaid balance has increased. In other words, it doesn't matter if you're borrowing on your credit card, for a mortgage, or even a new car, it costs more to borrow now than it did just a year ago.

In this inflationary environment, with most investments down year-to-date, people are looking everywhere for a ray of sunshine. There is a ray of hope out there, and while it's more for savers than borrowers, everyone can benefit to some degree.

A year ago, bank deposits hardly earned enough interest to move the needle in a positive direction. Savers who take the time to shop around will find banks, credit unions and insurance companies offering interest rates that actually start with a whole number instead of a decimal point.

Keep in mind that when interest rates on deposits were barely above zero all those years, the inflation rate was much lower than it is today. Now that inflation is running near eight percent, there are banks, credit unions and insurance companies offering deposits as high as four percent.

And with a bit of shopping and some due diligence, you should be able to find them

On the surface, getting a higher interest rate seems to be a good thing, but don't get too excited. Because when you factor in the loss of purchasing power due to higher inflation, your deposits still aren't gaining ground. If you're shopping for better rates, it's important to read and understand the fine print. That being said, most savers will take a higher rate on their savings regardless of inflation so that's a glimmer of brightness.

At the end of the day inflation makes it difficult to avoid the loss of purchasing power for everyone. So don't get overly greedy trying to keep pace with inflation.

When you step out of the world of saving into the world of investing, it's a big step. I say this because with most deposits your principal does not fluctuate. But when you move from the world of deposits to the investment world, you bring market risk into the equation. The principal can be very volatile.

Of course, everyone wants to get the most out of their savings and investments. And the best way I know to do that is to keep your safe money safe.

Email your questions to kenmorris@lifetimeplanning.com

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment Advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Society for Lifetime Planning is not affiliated with Kestra IS or Kestra AS. https://kestrafinancial.com/disclosures The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. Comments concerning the past performance are not intended to be forward looking and should not be viewed as an indication of future results.

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