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Gladys Tan

Financial Consultant

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3 Tips to Safeguard Your Personal Finance in the Midst of Inflation

Earlier in October 2021, the Monetary Authority of Singapore (MAS) tightened its monetary policy. The tightened policy was due to economic growth in the third quarter of the year, which was 6.5% higher than the corresponding period in 2020 (Source: CNA).

What this means is that the Singapore dollar is allowed to appreciate against a group of currencies that fall within an undisclosed category. As Singapore’s economy is heavily dependent on trade, this move is one that was coming sooner or later.

To better understand this, Singapore makes use of the Sing dollar nominal effective exchange rate (S$NEER) to regulate currency within an unspecified band. Should this fall out of the band, the MAS steps in by purchasing or selling currency. The tightened policy will raise the slope of the S$NEER policy slightly from its previous position at 0%. One direct consequence of this change is that imports will become cheaper and exports more expensive.

Tips to Safeguard Your Finances Today!

Avoid keeping too much cash around

Of course, it’s important to have some emergency funds stashed away.

We typically recommend three to six months’ worth of living expenses to most of our clients. However, having more cash than necessary is not a good idea, especially when inflation sets in. You will find that you lose spending power, and it’s time to shop around for an investment option that offers better returns.

Keep a diversified portfolio

In a high inflation environment, some investors tend to panic. The important thing is to ensure your portfolio is well diversified, with some inflation-safe investments thrown into the mix.

This includes floating-rate bonds over a shorter time period and dividend-paying stocks for the long haul.

Purchase durable, long-lasting products

When shopping for necessities such as household appliances, opt for products that can serve you well for years to come. Although they are likely to come with a higher price, the savings you can make in the long run are well worth it.

Do you have more questions or concerns about your personal finances in times of uncertainty?

Feel free to connect with me on Instagram or book a call if you'd like to chat.

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