IF PRICES START TO SPIRAL
REVISE YOUR BUDGET. Increase estimates of costs that aren’t fixed, such as clothing, travel, food and luxuries.
SET ASIDE MORE OF YOUR INCOME. You’ll need a bigger nest egg to cover personal emergencies, vacations and a child’s school costs.
BOOST INSURANCE COVERAGE. Review your home and theft insurance to be sure you have an inflation escalator; if not, you’ll need to add coverage to adjust for increased replacement costs.
INVEST IN STOCKS OF WELL-MANAGED, FINANCIALLY SOLID COMPANIES MAKING INFLATION-RESISTANT PRODUCTS. Everyone will always need aspirin, antibiotics, food and petrol, no matter how expensive they become.
CONSIDER BANK FDS AND MUTUAL FUNDS. FDs and Mutual Funds may be a losing deal when stocks are soaring and interest rates are low, but when rates rise ultrasafe FDs and government bonds can pay. Keep time horizons small: With an FD, buy a oneyear lock in to get a good yield. Then if interest rates continue to climb, roll it over to an FD with a higher yield when the original comes due.