7 tips to inflation proof your finances

Protecting your finances from inflation is essential to ensure that your money retains its value over time. Here are seven tips that can help you safeguard your finances against inflation:

Karen Deenihan, Aviva Life & Pensions Ireland DAC
Karen Deenihan, Aviva Life & Pensions Ireland DAC

1. Reassess your savings

The inflation rate in Ireland is around 4%1, and the interest rates offered by traditional Irish banks may not be enough to keep up with the cost of living. Therefore, reviewing your savings and considering alternative options that could help you earn inflation-beating returns is important.

2. Consider investing

Investing your money beyond your emergency fund can help you meet medium to long-term financial goals by giving your money the potential of a higher return over the medium to long-term.  The funds that you decide to select for investment will have a big impact on the kind of return you can expect. There are many different funds to choose from, and a variety of asset classes and risk profiles to consider. In the following table we highlight the performance of certain Aviva funds with different risk ratings.

Gross Fund Performance to 01 February 2024

Fund Risk Rating 5 Year Annualised Return 10 Year Annualised Return
Cash Fund 1 0.5% 0.2%
Multi-Asset ESG Active 3 4 2.4% 2.5%
Cantor Multi-Asset 70 Fund 5 10.7% 8.5%
High Yield Equity 7 15.3% 12.8%

Source: Longboat Analytics to 01 February 2024. Performance is quoted gross of fees. ESMA Risk ratings 01 February 2024. For more information on the operation, benefits, and risks of investing our funds, including how we risk rate them please see ‘Your Investment Guide'.

3. Avoid market timing

Trying to time the market can be difficult and risky. Instead, adopting a long-term approach allows you to weather short-term storms while capitalising on long-term trends.

4. Trim your regular costs

Rising prices can make it challenging to manage your finances effectively. Therefore, it is essential to review your everyday expenses and ensure you get the best deal on services such as phone contracts, home broadband, and insurance.

5. Change what you buy

Switching to supermarkets' own-brand products can help reduce your grocery bills, and you could also consider switching to more cost-effective options for other items you regularly buy.

6. Get the best mortgage rate

Ensure you are on the most competitive mortgage rate to ensure you are not paying more than you need to.

7. Talk to a Financial Broker

Speaking to a financial broker can help you get professional advice on managing your finances effectively and protecting your investments from inflation.

1 Source: CSO January 2024.

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Warning: Past performance is not a reliable guide to future performance.

Warning: The value of your investment may go down as well as up.

Warning: If you invest in these funds, you may lose some or all of the money you invest.

Warning: This fund may be affected by changes in currency exchange rates.

The funds referred to in this document may be linked to an insurance-based investment product and the Key Information Document (KID) for this product is available at www.aviva.ie/KIDs. The Risk Ratings of the funds referred to in this document differ from the corresponding Summary Risk Indicators shown in the KID. An explanation of the differences between the Risk Rating and the Summary Risk Indicator is available at the  location above.

Aviva Life & Pensions Ireland Designated Activity Company, a private company limited by shares. Registered in Ireland No. 165970. Registered office at Building 12, Cherrywood Business Park, Loughlinstown, Co. Dublin, D18 W2P5. Aviva Life & Pensions Ireland Designated Activity Company, trading as Aviva Life & Pensions Ireland and Friends First, is regulated by the Central Bank of Ireland. Tel (01) 898 7950.