Tuesday Tip of the Week: March 14, 2017
Investing as Inflation Protection
Thanks for reading the “Monday Morning Money Moment” yesterday. In that post, I discussed how inflation is eroding your money. The basic principle is that your dollar will be worth a little less tomorrow than it was worth today. Inflation is a simple concept that most of us understand. What we don’t usually understand is the actual impact it has on our lives. Most of us have goals that we wish to achieve and they usually require money to get them. For our medium and long term goals it is important to understand the impact of inflation. It is also important to understand our position in life so in order combat the effects of inflation.
When obtaining potential employment you must find out if your employer gives regular raises. If you are currently employed and your boss does not give regular raises then it might be time to find a new job. Not only is it disrespectful to not give regular raises it is also financially damaging. Everything else in the world increases in price every year and so should your wage. Making $20 an hour might seem great but in ten short years, it is only worth about $16. I’m not saying you should quit your job because you haven’t gotten a raise in 4 years. I am saying keep your options open and your ear to the ground.
Now here is something you have a little more control over. Have your money work as hard as you do. Every dollar you have sitting in your bank account is working for the bank, not you. They grow their bottom line with your savings. They lend based on the deposits they receive. Here is an eye opener for you. They use your money to lend other money back to you but then charge you interest on the money you borrow. Messed up eh? Don’t forget the fee’s you get charged for pretty much everything you do. You can see why they break records every quarter. I’m not saying to not have money in the bank. I do have money in the bank as my emergency fund. I also have a TFSA that allows my money to grow. For retirement, I have an RRSP that grows as well. If you have children getting an RESP for their education is gold. Achieving a 5% rate of return on these investments is achievable. That will help you take a bite out of inflation.
The great part about compound interest is that you make interest off your interest. That’s better than the bank making interest off your money. Ask a friend about the ways you can have your money work for you. Better yet ask a financial advisor. Plant the seed. Water the plant. Watch it grow. Eat the fruit. Repeat! Tune in tomorrow for “Wednesday WTF.” Happy Saving Friends.!
“Inflation is when you pay fifteen dollars for the ten-dollar haircut that you used to get for five dollars when you had hair.” – Sam Ewing
https://budgetboss.ca/monday-march-13-2017/
Facebook – @JoeBudgetBoss LinkedIn – Joseph James Francis Quora – Joseph James Francis
Twitter – @JoeBudgetBoss Instagram – @JoeBudgetBoss
Joseph James Francis is a Financial Advisor. You can find him on various social media platforms and at budgetboss.ca.