Inflation, the devourer!

Inflation (rise in cost) is an unseen devourer of your cash. Understand it and learn how to overcome it and leave more money in your purse strings instead of sinking with it.

It is defined as the rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling. So as prices rise, every dollar will buy a smaller percentage of a good. For example, if the inflation rate is 2%, then a $1 pack of gum will eventually cost you $1.02 in a year. The misnomer about the Bureau of Land Statistics (BLS) calculated rate of inflation is that it is an average reading that does not fully relate to actual surge in prices in many goods and services as these may rise faster than the average measure of the rise in cost of goods.

It is measured by the Bureau of Land Statistics and it is based on the Consumer Price Index (CPI) which gives an average monthly or yearly rate of inflation. Let’s take a look at how the average rise in the cost of goods can vary much from the true inflation rate in any goods or services:

Let’s say your parents told you that in 1970 a movie ticket had a cost of 50 cents. How could you tell if movies have increased in price faster or slower than most goods and services? To convert that price into today’s dollars, use the CPI.

The average CPI for 1970 = 38.8
The average CPI for 2011 = 218.8

 The following formula is then used to calculate the price:

1970 Price x (2011 CPI / 1970 CPI) = 2011 Price

 Using the actual numbers:

$0.50 x (218.8/38.8) = $2.90

 Today, a movie ticket in the US will usually run at least $7-$14. The price of a movie has increased much faster than other goods or services in the US or the US government calculated inflation rate. So my question is if the true rate can be 3.5 to 5 times the listed rate, how much is this a silent killer in our finances? Without reinvesting our dollars to generate higher returns to offset the rise in costs, are we not already dead in the water?

 Okay let’s talk first about some fairly boring information we yet need to know about before getting to our offensive action plan. Rise in costs is generally believed by economists to be caused by an excessive growth of money supply in the market faster than the economic growth. For example, to stimulate the economy, the government will try to keep interest rates low. This in effect makes more money available to be borrowed and so inflation tends to take its upward journey accordingly as available money rises faster than the economic growth. Fluctuations of demand of goods and supply can also affect the rate the costs of goods and services rise: Higher demand potentially can increase it and higher supply can adjust it downwards.

We must therefore eliminate the loss of the value of our money through rise in costs hence our purchasing power. Let’s look at some countermeasure and offensive plans:

We have heard it said in some form or another, if you are paying interest on credit cards and only receiving a fraction of that interest you are paying on credit card as interest on your bank account, move to paying down your credit cards to save the interest you are paying which can be used for investing. It would be really disappointing to realize that interest rate costing you 14% per year may actually be costing you in excess of 20% when factoring inflation and late monthly payments. This definitely is a problem especially for the longer spell. The second focus when your credit cards payments are down or you have saved at least 6 months of living expenses or you have money you are looking to establish good return on investment, should be that  you consider investments that are secured and highly profitable in emerging markets using an adept team to win (contact our adept team today).

Secured investments will establish props that will allow you to recover your principal and a reasonably expected return even in a worst case scenario. The best option is to consider real estate investments in emerging markets because the security of the asset and the boom/growth effects of the emerging market will provide security for your intended goal. Some of these secured asset classes in the US emerging market includes multifamily (apartment) investing, self-storage investing, mobile home parks, Tax liens and mortgage notes. The alternative is equally and potentially more rewarding is to look to investing offshore where a methodical approach with an Adept team to facilitate a turnkey operation for you will make your investing highly profitable, secured and painless in large part contrary to popular misconceptions. Offshore investments in emerging market can create much security in the lower cost of labor, incentives provided for foreign direct investment, tax holidays, and high demand markets that pay higher than normal end-sales prices because of liquidity and infrastructure challenges of these markets.

Don’t allow the culprit of inflation and its rise to negatively impact you anymore. Don't fall for the deceiving published rate of the rise in costs using the Consumer Price Index. The key is to start investing with the assistance of an Adept team that understands how to seek out and help you develop, implement and profit secured from US and offshore emerging markets as you prefer. Allow your finances to grow intact starting today, contact our adept team today

How to Invest > Where to Invest Money > Inflation