Around the globe, commodity prices are rising for the last two months: beef, chicken, milk, wheat, corn, and pork. Sugar is up 20% in the last two months and coffee is up 70% over the last 3 months. Drought conditions in California, the Middle East, along with unrest in Ukraine are pushing many prices upward.
Part of financial literacy is consistently ratcheting up your income for inevitable rising costs. Every season there are price rises of some type that are straining budgets for people on fixed incomes. Which is the secret to keeping ahead of these price rises – never have a fixed income. Each year you have 12 months to either actively more income or add to your investments that produce passive income such as interest, dividends, and rental income.
To be more aggressive, you can create your own hedge reserve from exchange traded funds (that trade like stocks) for a dozen commodities – gasoline, gold, corn, cotton, heating oil, coffee, natural gas, sugar, etc. If any of specific commodity makes up an important part of your budget, you make want to consider a hedging strategy mentioned the in post on 5/13/13 on “Timing Your Gas Tank.”