What do financial advisers say?

According to the University of Michigan study on consumer behavior in the United States, we can see that by 2021, for every 4 people 1 have said that their purchasing power has been eroded by rising product prices and services. Which is directly reflected in the inflationary index as of October of this year, which reaches more than 6%, if, as you read it, 6%.

Of course inflation has always been something that stresses the entire population because we know very well:

“That prices go up in the elevator while salaries go up the stairs”

Just by going out or simply buying something online it is easy to see how everything is more expensive and your money reaches less and less; in the same way, the news and the news are in charge of showing you everywhere the word inflation.

But as they say there:

“You do nothing with worrying without taking care of yourself”

So it is better that we leave it to the media and even some prophets of disaster who say that hyperinflation can come when many of them have no idea what that is, as if we do. many Latinos given that their countries have experienced hyperinflation or, as is the case in Venezuela, which is still experiencing this inflationary process.

Let’s do a small count to explain what is happening:

We all know that the world economy stopped as a result of the pandemic and companies stopped their production lines, causing many people to stay at home consuming what they needed and even being able to save with which the inflation rate for 2020 was barely a 1.2% situation that was not widely publicized by the media or at least not in a sensationalist way like now.

Later it was thought that it was a temporary phenomenon and that it would last a short time taking into account that there were sectors that were more affected than others, such as hotels, used cars, air tickets, thinking that these services were normal or products go up a lot once the world will reactivate.

Now, inflation continued to grow and as if it were a virus it began to affect other sectors of the economy, driven by many factors but particularly by two forces:

1) The amount of money that was injected into the economy to reactivate it and that the evil was not greater, which would have implied the closure of companies and that unemployment remained at such high figures and the impact for millions of families.

2) The number of people who did not return to their previous jobs, which has caused job vacancies in the United States to reach one of their historical highs, causing employers to have to offer higher salaries to attract new personnel, which goes directly to the price of the products.

Although normally one does not trust much in the projections of the economists, this time there is a great consensus among them where they indicate that by the end of 2022 this situation should stabilize.

So there is no need to worry?

There is precisely the big problem, when we think that inflation is only a temporary issue that should worry you when it starts to rise in a timely manner like now.

You should always take care of inflation, no matter if you think that it will go down in the future because it is acting as if it were precisely a virus that is eating your money.

Let’s see the following example, suppose that in 1990 you had $ 2.45 in your bank account which would have allowed you to buy a Big Mac, now the years go by and you leave that money in your bank account and then in October 2021, you say I’m going to buy a Big Mac with what I have in the bank seeing to your surprise that although your balance still showed the same amount of $ 2.45, the Big Mac now cost almost $ 4, with which you can only buy a little more than half a hamburger.

Likewise, suppose that this same person knows that the money in the bank accounts is being eaten up by inflation and knows that he has no possibility of profit, deciding to invest his $ 2.45 in the Stock Market (in the Standard and Poors 500 – the 500 largest stocks in the USA) and decides in October 2021, to see how much money he had seeing that his money grew to more than $ 30 with which he can now buy more than 7 hamburgers (source: Yahoo Finance and Eatthis.com)

Of course we all know that historical returns do not predict what may happen in the future, but we also know that companies do have the possibility in time to raise their prices to their customers and, although in the stock market the balance of your account will go up and down over time we see that history teaches us that stocks have traditionally been a refuge to protect your money if you know how to have a long-term vision.

Like everything in life, we always recommend that you look for how to advise yourself on these issues, for which financial advisers and planners are prepared to help you invest your money, being ideal that you always support yourself with a certified financial planner in the United States (CERTIFIED FINANCIAL PLANNER ™)

The great conclusion will continue to be like that famous story that says, if you put a frog in a pot and you raise the temperature very little by little it is very likely that it will cook without knowing it, but rather you try to put it in a pot with water hot will pop out quickly. Do not let this high inflation prevent you from seeing that if you do not act on time, your money will suffer over time.

Alonso Rodríguez Segarra

Founder & CEO Advise Financial

advise-financial.com

Alonso is a “CERTIFIED FINANCIAL PLANNER™” who is dedicated to increasing the Financial Well-being of nurses, physicians and successful immigrants in Florida and Texas. With more than 20 years of experience in the world of finance, always working for the best interest of his clients, under fiduciary criteria.