{"id":641,"date":"2022-05-06T10:00:32","date_gmt":"2022-05-06T10:00:32","guid":{"rendered":"https:\/\/advisor.wellington-altus.ca\/towerwealthadvisory\/?p=523"},"modified":"2023-11-28T21:34:02","modified_gmt":"2023-11-28T21:34:02","slug":"combatting-higher-prices-finding-ways-to-deal-with-inflation","status":"publish","type":"post","link":"https:\/\/advisor.wellington-altus.ca\/smokinbulls\/2022\/05\/06\/combatting-higher-prices-finding-ways-to-deal-with-inflation\/","title":{"rendered":"Combatting Higher Prices: Finding Ways To Deal With Inflation"},"content":{"rendered":"
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Download PDF Version Here<\/strong><\/em><\/a><\/div>\n<\/div>\n
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As\u00a0the\u00a0theme\u00a0of\u00a0inflation\u00a0continues\u00a0to\u00a0dominate\u00a0the\u00a0financial\u00a0headlines,\u00a0investors\u00a0may\u00a0be\u00a0wondering\u00a0what\u00a0steps\u00a0can\u00a0be\u00a0taken\u00a0to\u00a0combat\u00a0rising\u00a0prices.<\/p>\n

Higher\u00a0inflation\u00a0has\u00a0been\u00a0more\u00a0persistent\u00a0than\u00a0many\u00a0expected,\u00a0largely\u00a0driven\u00a0by\u00a0the\u00a0anomalies\u00a0of\u00a0the\u00a0pandemic\u00a0\u2014\u00a0most\u00a0significantly\u00a0on\u00a0the\u00a0supply\u00a0side,\u00a0due\u00a0to\u00a0supply\u00a0chain\u00a0and\u00a0labour\u00a0market\u00a0issues\u00a0still\u00a0lingering\u00a0from\u00a0the\u00a0economic\u00a0shutdowns.\u00a0Now,\u00a0we\u00a0may\u00a0be facing continued headwinds\u00a0as\u00a0a\u00a0result\u00a0of\u00a0the\u00a0conflict\u00a0in\u00a0Europe.<\/p>\n<\/div>\n<\/div>\n

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Consider,\u00a0also,\u00a0that\u00a0inflationary\u00a0expectations\u00a0can\u00a0help\u00a0to\u00a0drive\u00a0inflation.\u00b9\u00a0Perhaps\u00a0the\u00a0most\u00a0extreme\u00a0case\u00a0in\u00a0recent\u00a0times\u00a0belongs\u00a0to\u00a0Zimbabwe.\u00a0People\u00a0were\u00a0so\u00a0accustomed\u00a0to\u00a0expecting\u00a0higher\u00a0inflation\u00a0that\u00a0it\u00a0became\u00a0somewhat\u00a0self-fulfilling.\u00a0In\u00a02009,\u00a0Zimbabwe\u2019s\u00a0inflation\u00a0rate\u00a0hit\u00a0230,000,000\u00a0percent.\u00a0Prices\u00a0would\u00a0change\u00a0by\u00a0the\u00a0minute,\u00a0but\u00a0the\u00a0country\u00a0kept\u00a0printing\u00a0money.\u00a0At\u00a0the\u00a0height\u00a0of\u00a0their\u00a0economic\u00a0problems,\u00a0they\u00a0issued\u00a0a\u00a0one\u00a0hundred\u00a0trillion\u00a0dollar\u00a0bill\u00a0\u2014\u00a0the\u00a0largest\u00a0denominated\u00a0note\u00a0ever\u00a0circulated.\u00a0When\u00a0the\u00a0Zimbabwean\u00a0dollar\u00a0was\u00a0abandoned\u00a0as\u00a0the\u00a0official\u00a0currency,\u00a0the\u00a0hundred\u00a0trillion\u00a0dollar\u00a0bill\u00a0was\u00a0only\u00a0worth\u00a0about\u00a0US$0.40.\u00b2<\/p>\n

Of\u00a0course,\u00a0we\u00a0don\u2019t\u00a0expect\u00a0similar\u00a0hyperinflation.\u00a0It\u00a0is\u00a0likely\u00a0that\u00a0inflationary\u00a0pressures\u00a0will\u00a0temper\u00a0as\u00a0things\u00a0return\u00a0to\u00a0normal. However, there\u2019s little dispute that inflation\u00a0is\u00a0here,\u00a0at\u00a0least\u00a0for\u00a0the short run, so consider\u00a0these\u00a0ways\u00a0to\u00a0help\u00a0deal\u00a0with\u00a0inflation.<\/p>\n<\/div>\n<\/div>\n

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Don\u2019t<\/b>\u00a0<\/b>overlook<\/b>\u00a0<\/b>the<\/b>\u00a0<\/b>merits<\/b>\u00a0<\/b>of<\/b>\u00a0<\/b>being<\/b>\u00a0<\/b>invested.<\/b>\u00a0<\/b>History\u00a0has\u00a0shown\u00a0that\u00a0over\u00a0longer\u00a0time\u00a0periods\u00a0(and\u00a0even\u00a0despite\u00a0short-\u00a0term\u00a0volatility),\u00a0equity\u00a0market\u00a0returns\u00a0outperform\u00a0inflation.3\u00a0This\u00a0is\u00a0a\u00a0good\u00a0reminder\u00a0of\u00a0the\u00a0merits\u00a0of\u00a0staying\u00a0invested.\u00a0Now\u00a0may\u00a0be\u00a0a\u00a0great\u00a0time\u00a0to\u00a0review\u00a0your\u00a0finances:\u00a0do\u00a0you\u00a0have\u00a0available contribution room\u00a0in\u00a0a\u00a0TFSA\u00a0or\u00a0RRSP,\u00a0or\u00a0funds\u00a0sitting\u00a0idle\u00a0that could\u00a0be\u00a0invested\u00a0to\u00a0benefit\u00a0your\u00a0future?<\/p>\n<\/div>\n<\/div>\n

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Better<\/b>\u00a0<\/b>tax<\/b>\u00a0<\/b>planning<\/b>\u00a0<\/b>may<\/b>\u00a0<\/b>help<\/b>\u00a0<\/b>put<\/b>\u00a0<\/b>funds<\/b>\u00a0<\/b>back<\/b>\u00a0<\/b>into<\/b>\u00a0<\/b>your<\/b>\u00a0<\/b>hands.<\/b>\u00a0<\/b>Inflation\u00a0is\u00a0often\u00a0referred\u00a0to\u00a0as\u00a0the\u00a0\u201csilent\u00a0tax.\u201d\u00a0As\u00a0such,\u00a0why\u00a0not\u00a0consider\u00a0tax\u00a0planning\u00a0exercises\u00a0to\u00a0help\u00a0put\u00a0funds\u00a0back\u00a0into\u00a0your\u00a0hands?\u00a0It\u00a0is\u00a0personal\u00a0income\u00a0tax\u00a0season\u00a0\u2014\u00a0an\u00a0opportunity\u00a0to\u00a0get\u00a0organized\u00a0and\u00a0avoid\u00a0overlooking\u00a0important\u00a0deductions\u00a0or\u00a0savings\u00a0on\u00a0your\u00a0tax\u00a0return.\u00a0Tax\u00a0planning\u00a0should\u00a0be a\u00a0year-round\u00a0exercise:\u00a0there\u00a0may\u00a0be\u00a0opportunities\u00a0for\u00a0income-splitting\u00a0with\u00a0a\u00a0spouse,\u00a0contributing to tax-advantaged\u00a0accounts,\u00a0or\u00a0planning\u00a0for\u00a0a\u00a0small\u00a0business.<\/p>\n<\/div>\n<\/div>\n

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Consider<\/b>\u00a0<\/b>a<\/b>\u00a0<\/b>budget<\/b>\u00a0<\/b>(or<\/b>\u00a0<\/b>help<\/b>\u00a0<\/b>others!).<\/b>\u00a0<\/b>A\u00a0budget\u00a0may\u00a0be\u00a0especially\u00a0helpful\u00a0for\u00a0those\u00a0on\u00a0fixed\u00a0incomes,\u00a0such\u00a0as\u00a0seniors or\u00a0younger\u00a0folks\u00a0just\u00a0starting\u00a0out.\u00a0It\u00a0can\u00a0help\u00a0to\u00a0provide\u00a0a\u00a0full\u00a0picture\u00a0of\u00a0inflows\u00a0and\u00a0outflows,\u00a0and\u00a0determine\u00a0which\u00a0costs\u00a0are\u00a0necessary\u00a0and\u00a0what\u00a0adjustments\u00a0can\u00a0be\u00a0made\u00a0to\u00a0account\u00a0for\u00a0any\u00a0increases\u00a0from\u00a0inflation.\u00a0Ironically,\u00a0the\u00a0calculation\u00a0of\u00a0the\u00a0official\u00a0measure\u00a0of\u00a0inflation,\u00a0the\u00a0CPI,\u00a0doesn\u2019t\u00a0include\u00a0such\u00a0items\u00a0as\u00a0gasoline\u00a0and\u00a0groceries,\u00a0everyday\u00a0living\u00a0expenses\u00a0incurred\u00a0by\u00a0almost\u00a0everyone\u00a0\u2014\u00a0and\u00a0for\u00a0which\u00a0costs\u00a0have\u00a0gone\u00a0up\u00a0significantly.<\/p>\n<\/div>\n<\/div>\n

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In<\/b>\u00a0<\/b>Jest:<\/b>\u00a0<\/b>A<\/b>\u00a0<\/b>Parting<\/b>\u00a0<\/b>Thought<\/b><\/p>\n

If\u00a0you\u00a0want\u00a0to\u00a0become\u00a0an\u00a0instant\u00a0\u201ctrillionaire,\u201d\u00a0you\u00a0can\u00a0buy\u00a0the\u00a0Zimbabwean\u00a0note\u00a0on\u00a0eBay.\u00a0The\u00a0irony\u00a0is\u00a0that\u00a0the\u00a0one\u00a0hundred\u00a0trillion\u00a0dollar\u00a0bill\u00a0is\u00a0worth\u00a0more\u00a0today\u00a0than\u00a0when\u00a0it\u00a0was\u00a0in\u00a0circulation:\u00a0around\u00a0US$200,\u00a0which\u00a0represents\u00a0a\u00a0whopping\u00a0\u201cappreciation\u201d\u00a0of\u00a0about\u00a061\u00a0percent\u00a0per\u00a0year since 2009\u00a0and\u00a0certainly\u00a0one\u00a0that\u00a0has\u00a0surpassed\u00a0inflation!<\/p>\n<\/div>\n<\/div>\n

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1. https:\/\/econofact.org\/thinking-can-make-it-so-the-important-role-of-inflationexpectations;\u00a0<\/i>2. http:\/\/cnn.com\/2016\/05\/06\/africa\/zimbabwe-trillion-dollar-note\/<\/i>index.html<\/i>; 3. www.cnbc.com\/2021\/11\/16\/as-inflation-rises-here-are-opportunities-to-<\/i>make-and-save-money-.html<\/i><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

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The information contained herein has been provided for information purposes only. Graphs, charts and other numbers are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information has been provided by J. Hirasawa & Associates and is drawn from sources believed to be reliable.
\nThe information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual\u2019s objectives and risk tolerance. This does not constitute a recommendation or solicitation to buy or sell securities of any kind. Market conditions may change which may impact the information contained in this document. Wellington-Altus Private Wealth Inc. (WAPW) and the authors do not guarantee the accuracy or completeness of the information contained herein, nor does WAPW, nor the authors, assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Before acting on any of the above, please contact me for individual financial advice based on your personal circumstances. WAPW is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.
\n\u00a9\ufe0f 2023, Wellington-Altus Private Wealth Inc. ALL RIGHTS RESERVED. NO USE OR REPRODUCTION WITHOUT PERMISSION<\/p>\n","protected":false},"excerpt":{"rendered":"

Download PDF Version Here As\u00a0the\u00a0theme\u00a0of\u00a0inflation\u00a0continues\u00a0to\u00a0dominate\u00a0the\u00a0financial\u00a0headlines,\u00a0investors\u00a0may\u00a0be\u00a0wondering\u00a0what\u00a0steps\u00a0can\u00a0be\u00a0taken\u00a0to\u00a0combat\u00a0rising\u00a0prices. Higher\u00a0inflation\u00a0has\u00a0been\u00a0more\u00a0persistent\u00a0than\u00a0many\u00a0expected,\u00a0largely\u00a0driven\u00a0by\u00a0the\u00a0anomalies\u00a0of\u00a0the\u00a0pandemic\u00a0\u2014\u00a0most\u00a0significantly\u00a0on\u00a0the\u00a0supply\u00a0side,\u00a0due\u00a0to\u00a0supply\u00a0chain\u00a0and\u00a0labour\u00a0market\u00a0issues\u00a0still\u00a0lingering\u00a0from\u00a0the\u00a0economic\u00a0shutdowns.\u00a0Now,\u00a0we\u00a0may\u00a0be facing continued headwinds\u00a0as\u00a0a\u00a0result\u00a0of\u00a0the\u00a0conflict\u00a0in\u00a0Europe. Consider,\u00a0also,\u00a0that\u00a0inflationary\u00a0expectations\u00a0can\u00a0help\u00a0to\u00a0drive\u00a0inflation.\u00b9\u00a0Perhaps\u00a0the\u00a0most\u00a0extreme\u00a0case\u00a0in\u00a0recent\u00a0times\u00a0belongs\u00a0to\u00a0Zimbabwe.\u00a0People\u00a0were\u00a0so\u00a0accustomed\u00a0to\u00a0expecting\u00a0higher\u00a0inflation\u00a0that\u00a0it\u00a0became\u00a0somewhat\u00a0self-fulfilling.\u00a0In\u00a02009,\u00a0Zimbabwe\u2019s\u00a0inflation\u00a0rate\u00a0hit\u00a0230,000,000\u00a0percent.\u00a0Prices\u00a0would\u00a0change\u00a0by\u00a0the\u00a0minute,\u00a0but\u00a0the\u00a0country\u00a0kept\u00a0printing\u00a0money.\u00a0At\u00a0the\u00a0height\u00a0of\u00a0their\u00a0economic\u00a0problems,\u00a0they\u00a0issued\u00a0a\u00a0one\u00a0hundred\u00a0trillion\u00a0dollar\u00a0bill\u00a0\u2014\u00a0the\u00a0largest\u00a0denominated\u00a0note\u00a0ever\u00a0circulated.\u00a0When\u00a0the\u00a0Zimbabwean\u00a0dollar\u00a0was\u00a0abandoned\u00a0as\u00a0the\u00a0official\u00a0currency,\u00a0the\u00a0hundred\u00a0trillion\u00a0dollar\u00a0bill\u00a0was\u00a0only\u00a0worth\u00a0about\u00a0US$0.40.\u00b2 Of\u00a0course,\u00a0we\u00a0don\u2019t\u00a0expect\u00a0similar\u00a0hyperinflation.\u00a0It\u00a0is\u00a0likely\u00a0that\u00a0inflationary\u00a0pressures\u00a0will\u00a0temper\u00a0as\u00a0things\u00a0return\u00a0to\u00a0normal. However, there\u2019s little dispute that inflation\u00a0is\u00a0here,\u00a0at\u00a0least\u00a0for\u00a0the short run, so consider\u00a0these\u00a0ways\u00a0to\u00a0help\u00a0deal\u00a0with\u00a0inflation. Don\u2019t\u00a0overlook\u00a0the\u00a0merits\u00a0of\u00a0being\u00a0invested.\u00a0History\u00a0has\u00a0shown\u00a0that\u00a0over\u00a0longer\u00a0time\u00a0periods\u00a0(and\u00a0even\u00a0despite\u00a0short-\u00a0term\u00a0volatility),\u00a0equity\u00a0market\u00a0returns\u00a0outperform\u00a0inflation.3\u00a0This\u00a0is\u00a0a\u00a0good\u00a0reminder\u00a0of\u00a0the\u00a0merits\u00a0of\u00a0staying\u00a0invested.\u00a0Now\u00a0may\u00a0be\u00a0a\u00a0great\u00a0time\u00a0to\u00a0review\u00a0your\u00a0finances:\u00a0do\u00a0you\u00a0have\u00a0available contribution room\u00a0in\u00a0a\u00a0TFSA\u00a0or\u00a0RRSP,\u00a0or\u00a0funds\u00a0sitting\u00a0idle\u00a0that could\u00a0be\u00a0invested\u00a0to\u00a0benefit\u00a0your\u00a0future? Better\u00a0tax\u00a0planning\u00a0may\u00a0help\u00a0put\u00a0funds\u00a0back\u00a0into\u00a0your\u00a0hands.\u00a0Inflation\u00a0is\u00a0often\u00a0referred\u00a0to\u00a0as\u00a0the\u00a0\u201csilent\u00a0tax.\u201d\u00a0As\u00a0such,\u00a0why\u00a0not\u00a0consider\u00a0tax\u00a0planning\u00a0exercises\u00a0to\u00a0help\u00a0put\u00a0funds\u00a0back\u00a0into\u00a0your\u00a0hands?\u00a0It\u00a0is\u00a0personal\u00a0income\u00a0tax\u00a0season\u00a0\u2014\u00a0an\u00a0opportunity\u00a0to\u00a0get\u00a0organized\u00a0and\u00a0avoid\u00a0overlooking\u00a0important\u00a0deductions\u00a0or\u00a0savings\u00a0on\u00a0your\u00a0tax\u00a0return.\u00a0Tax\u00a0planning\u00a0should\u00a0be a\u00a0year-round\u00a0exercise:\u00a0there\u00a0may\u00a0be\u00a0opportunities\u00a0for\u00a0income-splitting\u00a0with\u00a0a\u00a0spouse,\u00a0contributing to tax-advantaged\u00a0accounts,\u00a0or\u00a0planning\u00a0for\u00a0a\u00a0small\u00a0business. Consider\u00a0a\u00a0budget\u00a0(or\u00a0help\u00a0others!).\u00a0A\u00a0budget\u00a0may\u00a0be\u00a0especially\u00a0helpful\u00a0for\u00a0those\u00a0on\u00a0fixed\u00a0incomes,\u00a0such\u00a0as\u00a0seniors or\u00a0younger\u00a0folks\u00a0just\u00a0starting\u00a0out.\u00a0It\u00a0can\u00a0help\u00a0to\u00a0provide\u00a0a\u00a0full\u00a0picture\u00a0of\u00a0inflows\u00a0and\u00a0outflows,\u00a0and\u00a0determine\u00a0which\u00a0costs\u00a0are\u00a0necessary\u00a0and\u00a0what\u00a0adjustments\u00a0can\u00a0be\u00a0made\u00a0to\u00a0account\u00a0for\u00a0any\u00a0increases\u00a0from\u00a0inflation.\u00a0Ironically,\u00a0the\u00a0calculation\u00a0of\u00a0the\u00a0official\u00a0measure\u00a0of\u00a0inflation,\u00a0the\u00a0CPI,\u00a0doesn\u2019t\u00a0include\u00a0such\u00a0items\u00a0as\u00a0gasoline\u00a0and\u00a0groceries,\u00a0everyday\u00a0living\u00a0expenses\u00a0incurred\u00a0by\u00a0almost\u00a0everyone\u00a0\u2014\u00a0and\u00a0for\u00a0which\u00a0costs\u00a0have\u00a0gone\u00a0up\u00a0significantly. In\u00a0Jest:\u00a0A\u00a0Parting\u00a0Thought If\u00a0you\u00a0want\u00a0to\u00a0become\u00a0an\u00a0instant\u00a0\u201ctrillionaire,\u201d\u00a0you\u00a0can\u00a0buy\u00a0the\u00a0Zimbabwean\u00a0note\u00a0on\u00a0eBay.\u00a0The\u00a0irony\u00a0is\u00a0that\u00a0the\u00a0one\u00a0hundred\u00a0trillion\u00a0dollar\u00a0bill\u00a0is\u00a0worth\u00a0more\u00a0today\u00a0than\u00a0when\u00a0it\u00a0was\u00a0in\u00a0circulation:\u00a0around\u00a0US$200,\u00a0which\u00a0represents\u00a0a\u00a0whopping\u00a0\u201cappreciation\u201d\u00a0of\u00a0about\u00a061\u00a0percent\u00a0per\u00a0year since 2009\u00a0and\u00a0certainly\u00a0one\u00a0that\u00a0has\u00a0surpassed\u00a0inflation! 1. https:\/\/econofact.org\/thinking-can-make-it-so-the-important-role-of-inflationexpectations;\u00a02. http:\/\/cnn.com\/2016\/05\/06\/africa\/zimbabwe-trillion-dollar-note\/index.html; 3. www.cnbc.com\/2021\/11\/16\/as-inflation-rises-here-are-opportunities-to-make-and-save-money-.html The information contained herein has been provided for information purposes only. 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