The reason you can’t buy as much today than you could yesterday? Inflation.

Inflation is the decrease in the purchasing power of money, reflected in a general increase in the prices of goods and services in an economy. Basically, that means while a $1 bill will always be worth $1, the prices of goods & services are increasing, so what you can buy with that $1 get less & less.

Let me explain with a cup of coffee:

What causes inflation?

Inflations is caused when the money supply grows too big relative to the size of the economy. When this happens, the value of the currency (US Dollar) decreases. Which means purchasing power falls & prices rise.

This means what you can buy with that $1 bill gets less & less every day as more money is printed/created.

How much money supply is there?

As you can see from the chart above, especially in 2020, how much of an increase in money supply there has been. Hence why inflation has been crazy the past few years.

How do you stay ahead of inflation?

One way to stay ahead of (or at least attempt to) is through investing in the stock market. Historically, the S&P 500 has outpaced inflation over the long term. Of course there are other ways than the stock market, but since I am an investing newsletter, that is what I will talk about 🙂 

This graph compares the S&P 500 returns with inflation per year since 1960. As you can see, some years inflation out performs the S&P 500, but over time, the S&P 500 has outpaced inflation. Of course this is not guaranteed in the future, just looking at historical data.

One thing inflation proof? The Costco Hot Dog.

I made these two posts this week on X about the inflation proof Costco Hot Dog.

What can we learn from this?

Inflation is here to stay & will always be something to think about. Every time the supply of money is increased, prices rise, purchasing power decreases. So keeping cash (over the long term) means $10,000 today will not buy the same amount of goods that $10,000 in 10 years will.

Real quick, my podcast called The Decade Investor Podcast releases new episodes every week. This week I dropped three new episodes:

1. My Simple (yet effective) Path To Wealth

2. Should You Buy At All Time Highs In The Stock Market?

3. Time in the Market > Timing the Market

You can listen to them on any podcast playing app here: https://thedecadeinvestorpodcast.buzzsprout.com/share

I want to help you too. I will be able to help you… soon. Stay tuned, I have something coming VERY SOON that will revolutionize the game for Decade Investors.

(x)Tweet of the Week:

Thanks to inflation (and maybe other reasons idk) my car insurance has been raised…. A LOT:

Thank you so much for reading & I will see you next week! Until then, keep buying assets.🙂 

- Decade Investor