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Client Conversations: Are You Losing the Race Against Inflation?

There can be a downside to playing it "safe" if your assets are in investments that don't keep pace with inflation.

Client Conversations gives financial advisors an easy way to communicate with clients on topics influencing financial markets; it highlights common investor behaviors and offers ways to address the challenges investors face. Share this article with your clients, and remember to follow your firm's policies that govern sharing content with clients and prospects.

Client Conversations gives financial advisors an easy way to communicate with clients on topics influencing financial markets; it highlights common investor behaviors and offers ways to address the challenges investors face. Share this article with your clients, and remember to follow your firm's policies that govern sharing content with clients and prospects.



Fear of market volatility can make seemingly safe investments appear alluring. The downside of playing it “safe,” however, is that you may actually be losing out by putting your money in investments that don’t keep pace with inflation. The end result for you could be a loss in purchasing power.

Let's look at an example to bring this to life. The Ford Mustang launched in 1964, and the cost of a '64 standard coupe was $2,368. At that time, $100,000 invested in a 6-month CD would have provided you with $4,300 in income—almost enough to buy two Ford Mustangs! Unfortunately, the income on the same $100,000 CD today would only provide you with enough income to pay for a car cover and a racing stripe for your cherished Ford Mustang.
 

The Effects of Inflation: $100,000 6-Month CD Investment

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Talk to your financial advisor today about investments with the potential to outpace inflation

CDs are insured by the FDIC, offer a fixed rate of return, and are generally designed for short-term savings needs. The principal value and investment return of investment securities (including mutual funds) are subject to risk, will fluctuate with changes in market conditions, are generally considered long-term investments, and are not suitable for all investors.

 





 

1 Data Sources: Federal Reserve, BankRate.com, and Hartford Funds, 4/19
2 Source: cjponyparts.com, retrieved 3/19
3 Source: ford.com, retrieved 5/19 

Hartford Funds Distributors, LLC.

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