Smart Investor: How Worried Should You Be About Inflation?

These wide-moat firms are currently undervalued. [Morningstar](?utm_source=eloqua&utm_medium=email&utm_campaign=newsletter_smartinvestor&utm_content=28661&elqTrackId=aeb8ae7114ad419e808437b838bba325&elq=8a586ff88570458c9994fcceb6f538ea&elqaid=28661&elqat=1&elqCampaignId=13154) [Smart Investor] Smart Investor April 9, 2021 Just as more arms get jabbed with COVID-19 vaccines each day, more stimulus dollars are hitting bank accounts and mailboxes. Restaurants are reopening, baseball is welcoming back fans, and Godzilla vs. Kong made an impressive $50 million in its first weekend in theaters. Let the spending begin! And with it, talk of [inflation](. No, not runaway inflation, 1970s-style. The Fed is unlikely to let inflation go unchecked--but it has said it will allow for higher inflation until the economy gets back on track. Should you be concerned about inflation? As with most money matters, it depends. For starters, it depends on [your personal inflation rate](. Inflation isn't just about where the Consumer Price Index is; it's also about whether your own pocketbook is feeling the pinch of rising prices (and how great that pinch is) based on your own spending habits. It also depends on your [life stage](. Investors in accumulation mode probably have enough stock exposure to generate portfolio returns in excess of inflation--and there's a chance a raise from your employer could help cover increases in your personal inflation rate. It's a different story for those nearing or in retirement, though. Those approaching retirement might wonder how inflation could impact their withdrawal-rate plans. And those who already rely on their portfolios for retirement income likely have more modest equity allocations to blunt inflation’s impact. So, before heading out to that restaurant, ballpark, or movie this weekend, conduct a personal inflation check to figure out if you should, in fact, take action. Action might include increasing your savings rate (and spending less), considering [a more conservative starting withdrawal rate]( or adding [Treasury Inflation-Protected Securities]( to your portfolio. -Susan Dziubinski, director of content ADVERTISEMENT [media]( [media] Morningstar Specialists [When Higher Inflation Meets Your Withdrawal Rate]( [When Higher Inflation Meets Your Withdrawal Rate]( Christine Benz While few are predicting a 1970s-style inflation spiral, it’s still worth thinking through how inflation could affect your plan. [What Are Target-Date Funds?]( [What Are Target-Date Funds?]( Karen Wallace, CFP® Investors in target-date funds can set up a diversified portfolio and maintain a sensible asset allocation for decades without breaking a sweat. [Emerging-Markets Equities: A Promise Half-Fulfilled]( [Emerging-Markets Equities: A Promise Half-Fulfilled]( John Rekenthaler Their economies have astonished; their stock gains, not so much. 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[The First Quarter in Bond Funds]( Sam Kulahan, CFA Rising interest rates unsettle bond markets. [The First Quarter in International Stock Funds]( Eric Schultz The recovery continues. Listen Now Get the latest investing insights and market updates with [Morningstar’s podcasts]( available on your iPhone, iPad, Android, PC, or smart speaker. Stay connected: [twitter]( [facebook]( [linkedin]( [instagram]( [YouTube]( [Apple News]( [View online]( | [See all newsletters]( | [Share your feedback]( [Unsubscribe]( from this newsletter. Or update your [email preferences](. © 2021 Morningstar, Inc. All Rights Reserved. 22 W. Washington St. Chicago, IL 60602