Inflation is up.
This means your money is losing value.
Have you ever seen those pictures of people carting around wheelbarrows of cash in order to buy a loaf of bread? We are not there yet, but that is what inflation does.
Now, this is not to be confused with supply and demand.
In a free market, prices go up when demand goes up and supply cannot increase to match the demand. Prices will also go up when demand stays the same hut supply goes down.
But what happens in a free market is that more producers will enter the market to increase the supply and prices will regulate themselves.
Inflation does not care what the supply and demand are.
Since the value of the currency goes down, the prices go up… even if supply and demand are the same.
Think of it this way…
You have a $100 bill.
If inflation is 1%, a year from now your $100 bill will only buy you $99 worth of goods and services if the prices remain the same as today.
If inflation is 10%, a year from now your $100 bill is only worth $90.
Make sense?
Did you know you can help your money work smarter so you can overcome inflation?
This is what investing does.
If your investment- whether real estate, stocks, bonds, annuities, crypto, certificates of deposit, money market accounts, or even savings accounts (although savings accounts tend not to outpace inflation)- results in your money going up in value more than what inflation has done to decrease its value, you win.
This is how the rich preserve wealth. Believe me, they are not keeping millions in a savings account!
The downside to investing is that few investments are guaranteed. For example, you have a pretty good idea how much a bond, certificate of deposit, or bank account will earn in interest over time. These options, while often better than sticking your cash under a mattress, are almost never going to outpace inflation.
Most investments have some level of risk, but usually the level of risk corresponds with the potential reward. High risk means you could make a lot of money… or lose a lot (or lose it all).
The best way to ensure your investment outpace inflation without being too risky is to understand how investing works.
And, while this is covered in my Money Mom Academy, I am offering one part of it for FREE tomorrow, Thursday, November 18, 2021, at 6 pm in the free How To Be A Money Master facebook community. Head over there, answer the three easy questions, and you will be able to watch the 60 minute Effortless Investing masterclass live or as a replay.
In just one short hour you will learn everything you know to be able to make your first online stock purchase with confidence- even if you currently have no clue what to do or how to get started.
In this masterclass you will learn:
– If investing in the stock market is right for you (spoiler alert: it is not for everyone)
– How to choose the right broker for you
– How to choose the right stock(s) for you
– Whether to DIY it or hire a professional
– The basic lingo
Are you currently investing in stocks? If not, what is holding you back?