Do you know about - 7 Tips For Fighting Inflation - How to put in order For and Survive resignation in a Down economy
Federal Reserve Interest Rate History! Again, for I know. Ready to share new things that are useful. You and your friends.Inflation is one of the greatest eroding factors of your money. It can destroy any retirement plan if not addressed early in the planning process. Make no mistake about it, when you merge store losses with inflation, you have a toxic mix.
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As you get older and closer to retirement, you become more vulnerable to inflation. However, the effects of inflation over a lifetime can be devastating for anyone. When you reconsider that the mean American male age 50 has been subject to an mean inflation rate of over 4% in his lifetime, that means that ,000,000 in an inventory would spend like 4,111 would have when they were born. That is a total loss of 5,889 to inflation!
You've probably noticed that your regular trip to the grocery store is costing you more lately, what will it cost when you retire? Maybe you have already retired and you are being affected by other costs like medicine. Possibly you have kids in college and you have been humbled by the rise in tuition costs. The fact of the matter is that we are all affected by inflation, you can't see it, but you can feel it in your wallet.
If you have lost money in the stock store then you are feeling a duplicate whammy. While some investors think that rising stock prices are a hedge against inflation, this is wishful thinking. While inflationary periods companies raise prices to hold up their profit margins. When commodity costs rise, firm costs increase, driving up borrowing costs and hereafter income will be worth less. In a down stock market, not only can you lose money, but your money will be worth less because of inflation.
According to a study by Ned Davis Research, since 1952, the S&P 500 has gained 0.2%, on mean in the year after the buyer price index has grown by at least one ration point more than its five-year absorbing average. Currently, the Cpi is outpacing its five-year mean by 1.4 ration points. For the year of 2008, through October, the mean inflation rate is 9.38%. That is the highest that it has been since 1981.
In 1971, President Nixon, removed us from the gold standard. Our dollar is no longer backed by gold and the United States Treasury now prints money at will. We now have Federal reserve notes instead of gold backed dollars. When the Treasury prints money with nothing to back it our debt increases and our spending power decreases causing inflation. You can learn more about the Federal reserve and our Treasury in the book, The mammal from Jekyll Island.
What does this all mean to you? First, your dollar is worth less and will not buy as much as it would just last year. What can you do to protect yourself from inflation? I've put together 7 easy tips that you can use today to start fighting inflation and creating more spendable income While retirement.
7 Tips for Fighting Inflation
Keep Your Money absorbing - this does Not mean buying and selling constantly. It merely means that a stagnant dollar can be eroded quicker. An example of keeping your money absorbing would be to strip the interest or dividend off of your investments. By doing so and investing in tax advantaged vehicles you can also combat taxes. Invest in Assets and reduce Your Liabilities - this may sound simple, but it is often overlooked. You must first understand the inequity in the middle of assets and liabilities. An asset increases in value or provides income in the form of a dividend or cash-flow. Liabilities not only take money out of your pocket, but they can put you at risk. It's foremost that you tell your liabilities at least annually to see if you can reduce them. Save 15% or More - If you consistently save 15% or more of your gross income, you will put yourself in a position to retire more comfortably. If you are already retired you must find a way to live off of your assets, so spending less than 5% would be prudent. Pay income Taxes Now - all the time consult your tax consultant before manufacture tax decisions. Though you may have been advised to defer taxes, this could be counterproductive if tax rates increase in the future. A look at the history of taxes shows us that income taxes are near all time lows today. When you reconsider our current economic situation, where will taxes be in the future? Deferring taxes only postpones the pain, if you can earn an equivalent return, why put it off? Consider a Fixed Annuity with Lifetime income Rider - depending on where you are in life, an annuity can supply you with many benefits. One of the biggest is a guaranteed income that you can never outlive. Annuities also supply creditor security in some states and tax advantages. Indexed annuities can also supply upside gains with a floor to protect your principle from losses. Take a Look at Long Term Care - with curative costs chronic to rise, long term care assurance can save a house from a total financial meltdown due to sickness or injury. Long term care provides security when you are most likely to need it, While retirement. Without some form of protection, curative costs can deplete a nest quickly. Buy Permanent Life assurance - you may have been told to "buy term and spend the difference", but over time this has proven to be a losing strategy. If you followed that advice twenty years ago when you were 40, and were now 60, then your term assurance would probably be expiring and your store investments would have likely lost in value. Whole life assurance provides living benefits while fighting inflation and providing a permanent death benefit.
One of the biggest fear of retirees is running out of money. By following this advice you can forestall this from happening, guard your money from predators and allege liquidity.
Start salvage now, you're going to need it later,
Barry Page
Shield Financial Consultant
Legacy assurance Agency, Pllc
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