Apr 11•4 min read
8.5% Inflation, Now what?!
Have you seen the inflation numbers today? A whopping 8.5 percent! This here folks is the proverbial shit hitting the fan. Everything thing is getting more expensive and it doesn't look like its prices will be coming down any time soon if ever. Check out the inflation numbers posted by the U.S Bureau of Labor Statistics:
Overall inflation: 8.5 %
Food: 8.8%
Energy: 32%
Gasoline: 48%
Electricity: 11%
Natural Gas: 21%
Used Vehicles: 35%
As you can see things are going from bad to worse in the blink of an eye, so how do you protect your wealth during periods of rapid inflation?
You can ask your boss to give you a raise to combat the impact that inflation is having on your paycheck. How likely is this going to pay off? There is probably a 70/30 chance that you will be denied this request.
Businesses are already struggling to find workers to stay on the job and are offering record wages to employees. I don't see them adding an additional 8.5 percent pay increase to help employees deal with inflation. So if you can't ask for a raise what other solutions do you have?
Investing
If you want any chance of "beating" inflation you are going to have to invest your money in something that can generate more than an 8.5 percent return. Not all investments are created equal. Some are better than others.
You can completely forget about investing in bonds unless you want to lose money. Take for example a corporate bond that pays out 3 percent in nominal terms. If you invest in this bond you will yield a negative 5.5 percent on that bond. This is not how you beat inflation. You should steer clear of bonds.
Stocks
Well if bonds are out, what else can you invest in to beat inflation? Stocks are a viable option and have been known to beat inflation over the long term. On average stock market returns average about 10 percent a year, which isn't bad and beats current inflation numbers but not by much.
Knowing what stocks to invest in is a whole other ball game, that either takes talking to a professional or doing your homework to find the right companies to invest in. Both require time and money to get right.
Real Estate
Real estate traditionally has been a good hedge against inflation as it benefits from inflation. Homeowners benefit from appreciation because home prices rise with inflation.
Rental property owners benefit from increased cash flow from tenants and more demand for rentals as the price of owning a home becomes unaffordable for consumers looking to buy.
The issue with real estate is it is location-dependent. Some places are more desirable than others within states and local jurisdictions. Working with a good real estate agent will help you mitigate the chance of making a bad investment decision.
What if I told you there was an easier way to protect yourself from the ravages of inflation? All you have to do is buy and hold it. That's it. This solution is Bitcoin.
Bitcoin Is The Solution
Bitcoin is the solution to this inflation problem. It has a 21 million supply cap limit and it can't be manipulated by a central authority like the federal reserve. The inflation rate of Bitcoin is set in stone in will never change.
Bitcoin's inflation rate is only 1.7 percent and will continue to go down from here as the remaining 2 million coins are mined. In fact, Bitcoin's inflation rate will drop to 1.1 percent by 2024. Bitcoin is deflationary which means the purchasing power of your Bitcoin will go up over time, not down.
By simply buying and holding Bitcoin you are guaranteed that your wealth in Bitcoin will increase the longer you hold it and this isn't even factoring in the price of Bitcoin in the equation.
Did you know that Bitcoin was the best performing asset over the last 10 years? Bitcoin produced an average annualized return of 230%! You won't get this type of performance from any other asset.
The dollar will continue to decline in value over time as the printing press will continue to run non-stop until it breaks.
Owning dollars and other dollar-denominated assets will become increasingly risky. Will things go to shit tomorrow? Probably not but you never know. Things tend to happen gradually, then suddenly. Bitcoin is the safe-haven asset that everyone should own right now. Heed the warning signs, rough times are ahead.
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