Why Is Life Still Expensive

Quote

“I remember the $0.05 hamburger and a $0.40-per-hour minimum wage, so I've seen a tremendous amount of inflation in my lifetime. Did it ruin the investment climate? I think not." - Charlie Munger

Why Is Life Still Expensive

Prices seem to be on an unstoppable rollercoaster, except we are all stuck paying for the ride.

Thanks to the pandemic, inflation skyrocketed to a 40-year high in 2022. While inflation has dropped down to 2.5%, the lowest it’s been since early 2021, the damage has been done.

Groceries, rent, eating out - everything seems to sting the wallet nowadays.

So, what exactly has seen the biggest price spikes, and what can you do to protect your money from inflation? Let’s get into it 👇️ 

Current Inflation

To give a better idea of exactly how wild inflation went during the pandemic here is a chart showing the rapid rise that peaked at 9.1%.

In response to the money printer firing on all cylinders, the Federal Reserve scrambled to fight this wave of inflation by bumping interest rates. Though we aren’t out of the woods yet, the Fed might have achieved the “soft landing” everyone believed to be impossible (slowed inflation without sending the US into a recession).

With inflation now below 3%, all should be back to normal, right?

Unfortunately not, here is a look at how this chart still impacts your life today.

Inflation is Everywhere

If the inflation curve above doesn’t mean much to you that’s okay. Here is a table that shows the top 10 items that have increased the most since 2020 as a result.

As you can see here, almost every one of these has likely impacted you in one way or another. If things keep going at this rate, you can expect an email series on how to start a chicken farm side hustle (just kidding, but here is an update on our cattle business if you missed it).

A few others that didn’t make the top 10:

• +17% - Daycare and Preschool

• +18% - Alcoholic beverages

• +23% - Haircuts and personal care services

• +23% - Rent

• +24% - Food at home

• +26% - Food away from home

• +30% - Baby food and formula

• +30% - Electricity

• +47% - Home prices (could be it’s own email)

• Source

You can’t hide from inflation folks.

Inflation Protector

Given inflation is all around us, what options do we have to protect our money?

The easiest (and least risky) method is a high-yield savings account. A couple of popular options here are Ally Bank and Public. You can also take advantage of money market funds like SPAXX and VMFXX (more info on these here).

The second option is to (drum roll) invest your money. Shocker I know, but it had to be said.

Since 2020 the S&P 500 is up 69% (39% adjusted for inflation). So any money invested over the last four years wouldn’t have only kept it’s value, but also increased in value. While inherently riskier, it is one of the most common ways to protect ones net worth against inflation.

If you are ready to invest, here is a seven-step checklist for finding great ETFs.

Conclusion

Inflation is cooling off, but don’t tell that to your wallet or it might get offended.

Prices will likely not decrease, so protecting your money through investing and high-yielding accounts like money market funds and HYSAs is more important than ever.

These will let you keep pace with price increases and if things go well even beat inflation.

Both are better than starting a chicken farm, trust me. ~ Cade

PS - If you've been affected by the recent hurricanes, we're sending you our best wishes. 🙏

Chump Change Picks

The Problem With China’s Space Program - Your likely not an astronaut, but here is a good video discussing the issues of China’s space program. Found it interesting given the recent increase of investing in Chinese companies.

Amazon Back To The Office  - Incase you missed missed it here is the message from Amazon’s CEO calling employees back to the office fulltime. No matter your feelings on WFH, the trend is obviously wearing off.

Lump Sum vs DCA - Short and to the point post on if you should dollar cost average or lump sum invest. The answer might be surprise you.

Best Memes

Lock and load boys.

I literally got this message from my brother.

Nothing in this email is intended to serve as financial advice. Do your own research. Thanks for reading, if you have any questions, comments, suggestions, etc. about the email don’t hesitate to send me a reply.