Is It Time To Worry About The Price Of Money?

Good Morning, 

Truthfully, the economy is better today than it was this time last year, and now that unemployment numbers are dropping, stimulus money is available, and more and more companies are getting back to work, there are a lot of worries about the actual value of a dollar.  

In the short term, with many gurus projecting 4, 5, and even 6% growth this year, that likely means inflation, and since the Federal Reserve has continued to keep the interest rate low, it could be a problem.  

What does that actually mean?  

Well, in addition to a dollar not going as far, it ultimately means that the cost of living is going to rise.  If – and that’s a big “if” these days – your employer gives COLA increases, you still might find it doesn’t go far enough to keep up.  

In other words, your income became statistically lower.  

While this might not be impossible to overcome for many people, here’s the challenge:  Senior citizens and those who are on set incomes aren’t going to have as much.  

Now, traditionally, Social Security does give a cost of living increase, but it’s a “backward looking” adjustment.  In other words, it might be 2022 before seniors and SSI recipients see any cost of living relief.  

Knowing that your dollar isn’t going to go as far this year, are there any strategies you can use in the short term?  

Well, for starters, if you have the ability to save money, don’t.  Invest it.  

How and where you do that is at your discretion, but one thing is for sure – you need to put it to work somewhere that is going to give you a better return than 2-3%!  

Just off the top of my head, that’s real estate – whether that means buying your first home, going ahead and purchasing a retirement home (or the property you’ll be building it on) or even buying a rental asset; it could be cryptocurrency, maybe precious metals, and that perennial favorite, the Roth IRA.  

No matter what, right now simply socking money away in a 401(k) cannot be the only strategy you use.  

Here’s why:  the price of money isn’t going to stay as low as it is.  Sooner or later, the Fed is going to raise those interest rates and then?  While your dollar might go farther, it’s also going to cost more to borrow a dollar.  

I’ll bet a few of you might be thinking, “Gee, we’re just getting back to full time,” or maybe, “I just started this new job, I’ve got to pay down some of the debt I created while I was out of work!”

While that’s true, you also can’t stop planning for the future.  

As much as I hate to say it, we have to move past the accumulation of “stuff” and move on to the accumulation of “wealth.”

Here’s a hint:  that big screen television isn’t going to accrue value over time, but that ounce of gold?  

It will.

Just like that rental home will.

When you’re ready to stop shopping for consumer goods and start shopping for assets, let me and the team know, because you might be surprised at how easy it is to grow assets in this type of economy and set yourself and your family up for a better retirement.  

I can’t wait to talk to you-

Ted

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