I took a little heat from my post last week, where I listed some ideas on how taxpayers could use refunds to create new money, and for the couple folks who want to spend their refund?
Great. I totally understand. There’s a time and place to “splurge” and if that’s with your tax refund, so be it. It’s not my money, it was merely my ideas…
But… if there’s one thing we’ve all learned in the last year, the price of EVERYTHING is going up. Inflation, despite the “spin” some politicians want to put on it, means your money isn’t going as far.
Obviously, that makes it hard to increase your personal wealth, whatever that number is, but I firmly believe there are assets that can be invested in that are “inflation proof.”
The goal of investing IS to increase wealth, but also to shield your money from inflation with the right investments. Indeed, some assets are considered inflation-proof, or at least, inflation-resistant.
A dollar today buys much less than a dollar a hundred years ago. In fact, according to the Bureau of Labor Statistics, a dollar in 1921 offered a purchasing power equivalent to just over $17 in 2022. Thus, money usually loses value as the years pass. In thirty years, the $1,000 tucked under your mattress might be worth less than $500 in today’s dollars. That’s the “power” of inflation.
On the other hand, some items – due to the way they were made, the craftsmanship of the period in which they were built, or their overall scarcity, continue to rise in value, nearly exempt from inflationary pressures.
As with many things economic, supply and demand play a crucial role in this assessment of value and help determine which assets might be inflation resistant.
Gold is often viewed as the standard of an inflation-resistant asset. Gold is largely inert, and finite in the amount available to buy. As a result, the price of an ounce of gold typically increases over time.
The same can be said of things like certain types of real estate, and on a shorter timespan, some collectibles, and a fairly narrow category of other investment-grade items.
In the end, long term value of the right investment can far outstrip inflation’s growth and allow you to not only create wealth and build the retirement you want, but also, to build a family legacy that can be grown over generations.
…But it has to start with you, and it starts when you decide it’s more important than a simple consumer transaction.
I’m ready to have that conversation if you are!