With the prospect of ever-increasing inflation looming on the horizon, it might be time to re-visit the topic of savings accounts and certificates of deposit. In the past, before annual inflation rates of 4% to 10% became par for the course, it was possible to come out ahead of the game investing in either of these assets. Sure, you might only make two or three percent annually on your money but you were gaining ever so slightly.
The government reports yearly inflation rates in the vicinity of 4%. That’s the best work of fiction we’ve read in a while. It’s at least 10%. Maybe more. That means that unless your money is working hard for you producing more than the rate of inflation, you’re going backwards.
Let’s say you have a certificate of deposit that “earns” you 4%. With inflation speeding along at, say, 10%, your money is being devalued by 6% each year. Every dollar in that CD is worth .94 cents at the end of year one, .88 cents at the end of year two and so on.
This is a losing game. Ever since we came off the gold standard, inflation has been the result. This isn’t your granddad’s economy any more. You’ve got to think differently to reach financial independence today. So what’s an investor to do? Run away from Wall Street as fast as you can. Consider attending Empowered Investor next live educational event to learn what kind of investing works now. Call 714-820-4200 for more information.
