7 Tips for Protecting Your Finances From Inflation
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    HOUSE MEDIAN ASKING PRICES AND WEEKLY CHANGE     Sydney $1,656,430 (+0.65%)       Melbourne $994,677 (+0.27%)       Brisbane $978,777 (+0.15%)       Adelaide $878,311 (-0.89%)       Perth $857,374 (-0.27%)       Hobart $742,122 (-0.64%)       Darwin $666,990 (-0.54%)       Canberra $987,062 (-0.84%)       National $1,052,287 (+0.12%)                UNIT MEDIAN ASKING PRICES AND WEEKLY CHANGE     Sydney $750,216 (+0.60%)       Melbourne $492,069 (-0.93%)       Brisbane $539,184 (+0.19%)       Adelaide $444,416 (-2.21%)       Perth $457,888 (+0.17%)       Hobart $527,154 (-0.12%)       Darwin $344,216 (+0.22%)       Canberra $504,424 (-0.33%)       National $530,515 (-0.07%)                HOUSES FOR SALE AND WEEKLY CHANGE     Sydney 10,120 (-121)       Melbourne 15,095 (-40)       Brisbane 7,990 (0)       Adelaide 2,438 (+11)       Perth 6,327 (-40)       Hobart 1,294 (-21)       Darwin 238 (+1)       Canberra 1,020 (+13)       National 44,522 (-197)                UNITS FOR SALE AND WEEKLY CHANGE     Sydney 8,780 (+4)       Melbourne 8,222 (-18)       Brisbane 1,619 (+1)       Adelaide 396 (-4)       Perth 1,599 (+9)       Hobart 213 (+10)       Darwin 400 (-6)       Canberra 1,003 (-24)       National 22,232 (-28)                HOUSE MEDIAN ASKING RENTS AND WEEKLY CHANGE     Sydney $820 (+$20)       Melbourne $610 (+$10)       Brisbane $640 (+$3)       Adelaide $610 (+$10)       Perth $670 ($0)       Hobart $550 ($0)       Darwin $700 ($0)       Canberra $680 (-$10)       National $669 (+$5)                UNIT MEDIAN ASKING RENTS AND WEEKLY CHANGE     Sydney $775 (+$15)       Melbourne $550 ($0)       Brisbane $630 (-$20)       Adelaide $500 (+$5)       Perth $628 (+$8)       Hobart $450 ($0)       Darwin $500 (-$15)       Canberra $570 ($0)       National $591 (+$)                HOUSES FOR RENT AND WEEKLY CHANGE     Sydney 5,426 (-22)       Melbourne 5,783 (+92)       Brisbane 4,042 (+149)       Adelaide 1,399 (+12)       Perth 2,345 (+25)       Hobart 383 (-2)       Darwin 94 (-10)       Canberra 595 (-9)       National 20,067 (+235)                UNITS FOR RENT AND WEEKLY CHANGE     Sydney 8,835 (+301)       Melbourne 4,537 (+107)       Brisbane 2,209 (+57)       Adelaide 391 (-8)       Perth 741 (-7)       Hobart 137 (+5)       Darwin 152 (-14)       Canberra 612 (+17)       National 17,614 (+458)                HOUSE ANNUAL GROSS YIELDS AND TREND       Sydney 2.57% (↑)      Melbourne 3.19% (↑)      Brisbane 3.40% (↑)      Adelaide 3.61% (↑)      Perth 4.06% (↑)      Hobart 3.85% (↑)      Darwin 5.46% (↑)        Canberra 3.58% (↓)     National 3.30% (↑)             UNIT ANNUAL GROSS YIELDS AND TREND       Sydney 5.37% (↑)      Melbourne 5.81% (↑)        Brisbane 6.08% (↓)     Adelaide 5.85% (↑)      Perth 7.13% (↑)      Hobart 4.44% (↑)        Darwin 7.55% (↓)     Canberra 5.88% (↑)      National 5.80% (↑)             HOUSE RENTAL VACANCY RATES AND TREND       Sydney 0.8% (↑)      Melbourne 0.7% (↑)      Brisbane 0.7% (↑)      Adelaide 0.4% (↑)      Perth 0.4% (↑)      Hobart 0.9% (↑)      Darwin 0.8% (↑)      Canberra 1.0% (↑)      National 0.7% (↑)             UNIT RENTAL VACANCY RATES AND TREND       Sydney 0.9% (↑)      Melbourne 1.1% (↑)      Brisbane 1.0% (↑)      Adelaide 0.5% (↑)      Perth 0.5% (↑)      Hobart 1.4% (↑)      Darwin 1.7% (↑)      Canberra 1.4% (↑)      National 1.1% (↑)             AVERAGE DAYS TO SELL HOUSES AND TREND         Sydney 30.3 (↓)       Melbourne 31.5 (↓)       Brisbane 31.7 (↓)       Adelaide 25.7 (↓)       Perth 35.4 (↓)     Hobart 33.7 (↑)      Darwin 36.2 (↑)        Canberra 32.0 (↓)     National 32.1 (↑)             AVERAGE DAYS TO SELL UNITS AND TREND         Sydney 31.3 (↓)       Melbourne 31.9 (↓)       Brisbane 32.1 (↓)       Adelaide 24.8 (↓)       Perth 38.7 (↓)       Hobart 37.6 (↓)     Darwin 46.5 (↑)        Canberra 39.2 (↓)     National 35.3 (↑)            
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7 Tips for Protecting Your Finances From Inflation

Advisors tell savers to adjust their personal-finance strategies to preserve purchasing power.

By Nick Fortuna
Mon, Nov 29, 2021 11:13amGrey Clock 4 min

Is it just a passing phase or here to stay? That’s the question facing consumers who are seeing their purchasing power erode.

There are some steps you can take to protect your finances no matter which way it breaks. Consider buying equities like bank stocks or consumer goods companies that perform well in inflationary periods. Don’t pay off that mortgage early—if we are indeed in an era of sharply rising prices and wages, you’re better off paying it off over time with watered-down dollars. Beware of bonds. If rates rise sharply, their principal value will take a hit.

Economists are split on how long the high inflation will last. Some argue that supply-chain issues caused by the Covid-19 pandemic are temporarily hiking prices, while others say that rising labour costs will result in elevated prices for years.

“That’s obviously the million-dollar question right now,” said Bryan Pinsky, president of individual retirement at AIG Life and Retirement. “There definitely are two camps out there, and there are things going on in the economy that would make you lean one way or the other.”

The Consumer Price Index, which tracks prices for a broad range of products such as gasoline, healthcare, and groceries, rose 6.2% in October from the same month in 2020, the biggest spike since December 1990, according to the Labor Department.

Bruce Brugler, managing director at Tiedemann Advisors, said that in an inflationary environment, “cash is trash” since dollars lose value over time. The problem is that the stock market and real estate have risen sharply in recent months, so investors will have to be more discriminating to find value.

Nevertheless, advisors say there are ways for savers to adjust their investment and personal-finance strategies to preserve their purchasing power. Here are seven tips for living in an inflationary period.

Identify stocks that will benefit from higher inflation or higher interest rates. Banking, consumer staples, energy, utility, and healthcare equities are likely to perform well, says investment advisor Brian Stivers.

Banks would come out ahead if the Federal Reserve eventually raises interest rates to combat inflation, and banks’ spreads between loans and deposits widen. Meanwhile, companies that produce essential consumer goods typically are able to pass on their higher costs to consumers.

Conversely, automotive and housing companies will get stung by rising interest rates that lift borrowing costs for customers. That makes them riskier investments just now.

“I’m a big fan in times like these of sector investing, and that can be done either in individual stocks or with exchange-traded funds,” Stivers said.

Rob Williams, managing director of financial planning and retirement income at the Schwab Center for Financial Research, said International stocks will appeal to investors who are concerned that the dollar will be weakened by inflation.

Shy away from fixed income. If rates climb, then certificates of deposit, fixed annuities, bonds, and bond funds purchased today will look less attractive in the future.

“If the Fed does raise rates, I would be careful about buying any new bonds and probably would wait on the sidelines until those rates start moving up,” Stivers said. “However, there are still some long-term bonds where people are getting yields of 3% or 4%, and you want to hold on to those.”

Similarly, buying a lifetime income annuity is less enticing in an inflationary environment. The monthly check you get for the rest of your life will lose value more quickly with high inflation.

Pinsky, of AIG Life and Retirement, said investors are opting for shorter-duration fixed annuities and equity-indexed annuities, which are tied to the performance of a stock index such as the S&P 500. Equity-indexed annuities provide principal protection for investors with a low-risk tolerance, he added.

Treasury inflation-protected securities, or TIPS, are another option for savers seeking low-risk investments, according to Matt Nadeau, of Piershale Financial Group. With TIPS, the principal increases with inflation as measured by the CPI.

Keep the right sort of debt. Homeowners carrying fixed mortgages with low interest rates are sitting pretty right. If you haven’t already done so, refinancing to lock in low rates is a good idea. If inflation takes off, homes prices are likely to climb and your fixed monthly payment may appear like a real bargain in a few years.

Credit-card debt, on the other hand, is particularly bad in a rising-rate environment. It’s floating-rate debt, and your monthly payments will go up.

Consider commodities. Investing in oil, natural gas, wheat and corn may be good hedges against inflation, said Matt Nadeau, of Piershale Financial Group.

He said ETFs such as the FlexShares Morningstar Global Upstream Natural Resources Index Fund (ticker: GUNR) and the SPDR S&P Global Natural Resources ETF (GNR) give investors a “broad-based opportunity” to take advantage of rising commodities prices, including energy, precious metals and agriculture.

Look for companies that benefit from rising labour costs. Brugler, of Tiedemann Advisors, said energy-service companies and technology companies aimed at reducing businesses’ labour needs might be interesting investments due to high inflation rates.

As an example, he pointed to Toast (ticker: TOST), a cloud-based software company providing a restaurant-management and point-of-sale system built on the Android operating system. As restaurants struggle to recruit and retain workers and are forced to raise wages, technology companies aimed at reducing head count should benefit, Brugler said.

“Think about the sources of inflation, and then identify which companies are helping other companies alleviate that cost pain by providing them with solutions,” he said.

Pull the trigger on essential purchases and charitable giving. If consumers expect to spend money on home goods, renovations, car repairs, or other products and services, they might be better off doing so now, before prices climb even higher, according to Brugler, of Tiedemann Advisors.

Charities also are likely to face higher prices for goods and services in the future.

“To the degree that you’d like your charitable dollars to accomplish something, putting it in the hands of that charity now also makes sense,” he said. “A $1,000 gift today is more valuable to that charity than a $1,000 gift several years from now.”

Brace for rising health costs. Health costs have risen faster than inflation for years. The pandemic, which is driving some health professionals out of the field, could accelerate that trend.

Stivers, of Stivers Financial Services, recommends increasing contributions to health savings accounts, if possible. Workers enrolled in high-deductible health insurance plans typically are eligible for HSAs, which allow savers to set aside money on a pretax basis to pay for qualified medical expenses. Investment gains within HSAs aren’t taxed.



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Boost for World Economy as U.S., Eurozone Accelerate in Tandem

Surveys point to a fresh acceleration in the U.S., even as growth in the eurozone strengthens

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Global economic growth is becoming more broad based, with surveys indicating that business activity in both the U.S. and the eurozone gained momentum in May.

The eurozone economy contracted in the second half of 2023 following a surge in energy and food prices triggered by Russia’s invasion of Ukraine, and the subsequent rise in interest rates intended to tame that inflation.

By contrast, the U.S. economy expanded strongly over the same period, opening up an unusually wide growth gap with the eurozone. That gap narrowed as the eurozone returned to growth in the first three months of the year, while the U.S. slowed.

However, surveys released Thursday point to a fresh acceleration in the U.S., even as growth in the eurozone strengthened. That bodes well for a global economy that relied heavily on the U.S. for its dynamism in 2023.

The S&P Global Flash U.S. Composite PMI —which gauges activity in the manufacturing and services sectors—rose to 54.4 in May from 51.3 in April, marking a 25-month high and the first time since the beginning of the year that the index hasn’t slowed. A level over 50 indicates expansion in private-sector activity.

“The data put the U.S. economy back on course for another solid gross domestic product gain in the second quarter,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.

Eurozone business activity in turn increased for the third straight month in May, and at the fastest pace in a year, the surveys suggest. The currency area’s joint composite PMI rose to 52.3 from 51.7.

The uptick was led by powerhouse economy Germany, where continued strength in services and improvement in industry drove activity to its highest level in a year. That helped the manufacturing sector in the bloc as a whole grow closer to recovery, reaching a 15-month peak.

By contrast, surveys of purchasing managers pointed to a slowdown in the U.K. economy following a stronger-than-expected start to the year that saw it outpace the U.S. The survey was released a day after Prime Minister Rishi Sunak called a surprise election for early July, banking on signs of an improved economic outlook to turn around a large deficit in the opinion polls.

Similar surveys pointed to a further acceleration in India’s rapidly-expanding economy, and to a rebound in Japan, where the economy contracted in the first three months of the year. In Australia, the surveys pointed to a slight slowdown in growth during May.

Businesses reported that they were raising their prices at the slowest pace since November, which should reassure the European Central Bank. However, the eurozone continued to add jobs in May, suggesting that wages might not cool as rapidly as the ECB had hoped.

The ECB released figures Thursday that showed wages negotiated by labor unions in the eurozone were 4.7% higher in the first quarter than a year earlier, a faster increase than the 4.5% recorded in the final three months of 2023

The ECB has signalled it will lower its key interest rate in early June, while the Fed is waiting for evidence that a slowdown in inflation will resume after setbacks this year.

Nevertheless, eurozone businesses and households shouldn’t bank on successive cuts to borrowing costs, ECB Vice President Luis de Guindos said. “There is a huge degree of uncertainty,” he said. “We have made no decisions on the number of interest rate cuts or on their size,” he said in an interview published Thursday. “We will see how economic data evolve.”

Continued resilience in the eurozone economy would likely make the ECB more cautious about lowering borrowing costs after its first move, economist Franziska Palmas at Capital Economics wrote in a note. “If the economy continues to hold up well, cuts further ahead may be slower than we had anticipated,” she said.

– Edward Frankl contributed to this story.

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