Gas shortages and lines, uncontrolled inflation, stagnant wages and a lack of faith in the Presidency. A new drawdown from international wars, conflict growing in the Middle East, proliferation of nuclear weapons and tension with Russia is common. Social activism at home is common and urban crime is uncontrolled. The 1970s are back!
With the rapid changes to America in the last 14 months, the need to reevaluate our priorities and planning for the future is required. In parts 1 and 2 of this special series, we examine how to survive financially. Be sure to subscribe with an email address to receive all posts.
Inflation is rising dramatically, outpacing gains in salary, hourly pay and likely any stimulus money / tax refunds received.
Current savings rates are paltry ranging from .01% to 2%. Meanwhile, most employers have not authorized large raises over the past decade, minimum wage increases notwithstanding. With inflation at least 4% overall and double digits in many sectors like gasoline, lumber, housing and automobiles; standard investments are losing money.
Fears of hyperinflation abound in the news. By definition: a 50% rise in prices of goods and services in a month or, 100% in a year. While signs do not support that movement nationwide, the uncertainty in most markets and the radical political changes coupled with global unpredictability, certainly create a level of concern.
The real estate market is scorching with interest rates kept artificially low and supply issues with no end in sight. Some people look to gold and silver as a hedge against inflation and the devaluation of the dollar, others to cryptocurrency. Cash and savings are obviously places of concern as inflation will erode their buying power. The bond market and Treasury bills, while more stable, are underperforming current inflation rates. The stock market is unpredictable with new highs but sudden drops as well. Moreover, the relationship of market indicators to stock prices no longer operates with predictability.
The best plan:
A diversity of assets and streams of income is the best course of action. Investing in real estate, businesses and collectibles can still be profitable (although a real estate peak may be near) while an assortment of holdings in crypto, equities, commodities and precious metals is likely a wise play given the uncertainties. Remember, as health insurance premiums continue to rise, employee share costs may as well depending upon agreements. Inflation and government debt are sure to rise putting more downward pressure on the dollar and and the purchasing power of ordinary Americans. With the current job market, a good strategy may be to pick up additional work, renegotiate salaries and /or benefits. As you and your family chart your future, join us in part 2 as we explore specifics of the plan offered above.