INFLATION
By Chuck Davis, CLU, ChFC
Remember when we used to buy ice cream for a nickel per scoop? Or buy a new mustang for $2000? Inflation has changed that.
Five threats to our financial security, a series.
Have you been to the grocery store lately? Prices seem to go up every week. And they do. Inflation is real. In fact, the annual average increase in the cost of living has increased 3% historically. This looks like a small number doesn’t it? But, it adds up rapidly.
You have probably read that compound interest is an outstanding benefit to investing for the long term. Take a look at compound interest table sometime. Inflation is the mirror image of compound interest and it shrinks your buying power year after year.
What can we do about our shrinking dollar? The stock market has long been considered an inflation hedge. The stock market is volatile. We have hardly any growth this year. Is it worth the risk of putting your money in this volatile area? Banks are paying as close to zero as they can get. We invest in gold and silver to hold on to our buying power. There are certainly no guarantees here.
The threat of inflation is that it shrinks our dollars. What do we do? We can attempt to offset this by earning more money during our productive working years. In retirement this is not an option. Not so good for us. Our protection is to diversify our assets. We need the guarantees of our social security, pensions, and annuities to provide income that we have to have to fund our basic needs. Then take a percentage and invest in less conservative assets such as dividend paying stocks and growth mutual funds. We need a calculated percent of our portfolio invested for the long term with potential to outperform conservative assets.
Ask your financial advisor how to implement the rule of 72 and the rule of 100. Next, stagger the start of your different retirement accounts.
Research longevity insurance. Retirement can stretch over 20-30 years or more. Inflation is a financial threat to your security. This article provides the power to offset it.
Five threats to our financial security, a series.
Have you been to the grocery store lately? Prices seem to go up every week. And they do. Inflation is real. In fact, the annual average increase in the cost of living has increased 3% historically. This looks like a small number doesn’t it? But, it adds up rapidly.
You have probably read that compound interest is an outstanding benefit to investing for the long term. Take a look at compound interest table sometime. Inflation is the mirror image of compound interest and it shrinks your buying power year after year.
What can we do about our shrinking dollar? The stock market has long been considered an inflation hedge. The stock market is volatile. We have hardly any growth this year. Is it worth the risk of putting your money in this volatile area? Banks are paying as close to zero as they can get. We invest in gold and silver to hold on to our buying power. There are certainly no guarantees here.
The threat of inflation is that it shrinks our dollars. What do we do? We can attempt to offset this by earning more money during our productive working years. In retirement this is not an option. Not so good for us. Our protection is to diversify our assets. We need the guarantees of our social security, pensions, and annuities to provide income that we have to have to fund our basic needs. Then take a percentage and invest in less conservative assets such as dividend paying stocks and growth mutual funds. We need a calculated percent of our portfolio invested for the long term with potential to outperform conservative assets.
Ask your financial advisor how to implement the rule of 72 and the rule of 100. Next, stagger the start of your different retirement accounts.
Research longevity insurance. Retirement can stretch over 20-30 years or more. Inflation is a financial threat to your security. This article provides the power to offset it.
Chuck Davis, CLU, ChFC, is the Managing Principal of Main Street Financial, Inc. Our mission is to assist businesses with building financial sustainable financial security. Our process provides guidance, advice, and solutions for the private business owner and individuals.
chuckbpw@gmail.com, www.mainstreetfinancialinc.com, 843.830.0555
chuckbpw@gmail.com, www.mainstreetfinancialinc.com, 843.830.0555