The latest March CPI report shows inflation increasing by 0.1%, up 5% from a year ago. In response, the Dow Jones Industrial index spiked 300 points as the Fed weighs its next policy move.
Most see raising the rate as a way to tame high inflation. However, higher rates mean a possible recession with jobs being lost, less money in people's pockets, and an opportunity to take advantage of lower prices in the stock market.
Many are anxious about the future of the economy. With the collapse of SVB, ripple effects may affect the technology sector for years to come. So how do retail investors fight this uneasiness of the current market?
One way is to create an effective investment plan for your future. It is hard to know how the wind will blow with the Fed. The inflation numbers suggest that the Fed will raise rates by another 25 basis points, but it is hard to gauge with the current bank failures.
It would be best if you thought about where your money is located. It could be in CDs, bonds, stocks, your house, or cold cash. What type of liabilities may you hold, such as loans and mortgages?
To make an effective plan, you must first know where you are to navigate where you want to go effectively. Inflation has been eroding the value of the dollar.