Investing is Key to Beating Inflation

Investing is the key to outpacing inflation and keeping your financial security on track. Consider that that $20 a 100 years ago would be equivalent to over $300 today and you can see the glaring impact of inflation. Now imagine that $100,000 in your bank account and it doesn’t seem like quite so much when you are facing retirement in 30 years. By the time you retire that amount of money will be worth pennies on the dollar. Typical savings and checking accounts pay next to nothing in the way of interest, so don’t expect even the highest yielding accounts to do much for your retirement nest egg. This is precisely why I’m an advocate of investing your money as opposed to letting it sit stagnant in a bank account.

When you say investment most people think of their 401k and IRA accounts. These are actually very good investment tools, and they often provide a tax shelter as well. If your employer currently offers one or more of these accounts to you then my suggestion is that you maximum your contributions to the best of your ability. Not only will you pay less in taxes, effectively garnering more money for yourself, and also taking advantage of employers matches. The problem is that most people fail to recognize investments outside of these accounts, and with the contribution and income limitations there simply isn’t enough flexibility to rely only on these investment vehicles.

This is where a brokerage account comes in handy. Truth be told, my after-tax brokerage account is enjoying far better returns this year than my so-called “retirement accounts”. I have a bevy of investments that range from blue chip and dividend paying stocks, to mutual funds and more. The trick is to be well diversified and to take on the appropriate amount of risk for your age and retirement goals. I would highly recommend using an online broker, they are user friendly, and very competitive when it comes to fees. Most brokers even have online tutorials on how to buy shares, so it really couldn’t get any easier for the average consumer.

The point is that you need to be somewhat aggressive with your savings plan otherwise you will actually start to lose money and not even realize it. Inflation is the enemy, and to fight back all you need to do is appropriately invest and you won’t have anything to worry about.


Investing is Key to Beating Inflation — 8 Comments

  1. Investing is definitely the key to beating inflation, but financial education is even more important because you want to make sure that you are investing in the right things at the right time.

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  3. Investing is the key to beating back inflation. Are you using a brokerage account because you have maxed out your 401k and IRA totals? I’m looking for what we will invest in next after we have gotten to the point where we have maxed out those accounts, is a brokerage account something you would recommend for that situation?

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