Inflation has continued to spook the markets. We’re down for the week, and year-to-date the S&P 500 is down about 7.5%. We had originally expected the Federal Reserve Bank , or “The Fed”, to raise interest rates three to four times this year – or three-quarters to one percent. Comments from some members of the Board of Governors have suggested it may be double that, including a double increase, or increase of half a percent, in March alone. Inflation is at the highest point in 40 years. And for us Gen Xer’s, that’s since 1982.
And all of this means, what, exactly? It costs more to buy food, both in the grocery store and at restaurants. It costs more to buy gas, a car, most consumer goods. The drop in the market, if you’re working, is a good thing. It means that, when you have money taken out of your paycheck to invest in a 401(k), TSP, or other regular investment, you’re buying more shares than you did before. Looking at data beyond inflation, we still expect a positive year in the market. And we’re still ahead of where we were this time last year.
February is life insurance awareness month. If you have someone in your life that’s dependent on your income, take the time to look at your life insurance. Do you have enough? Too much? A very general guideline is that one million dollars in life insurance will replace about $50,000 a year in income. And even stay-at-home parents need coverage. Without that person, you’ll need childcare, cooking, housekeeping. We’re discussing life insurance during our Women, Wine & Wisdom event next week.
Your action item to take this week is to plan your meals and make a grocery list. After housing, food is often a family’s second biggest expense. Planning meals and going shopping with a list is an easy way to control those costs.
You can always find more information on our Facebook page, or our website at covingtonalsina.com.
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