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Inflation is here in 2021 and it looks bad.

Inflations is here in 2021 and it looks bad.

We said this to all clients along time ago that market corrections on the stock market is not that bad, maybe it drops 20-30% and then it bounces back over time.

But dealing with inflation is a completely different beast!.

Inflation very short for you guys who do not know what it is, is that prices goes up and some prices goes up a lot and fast.

So basically everything you buy gets more expensive.

Let us give you a few examples here on what inflation really means in our everyday lives.

lumber

Lumber.

So for instance lumber has gone up almost 3x in from January 2020 to June 2021 and that will add on around 30.000 dollars for a single family home.

The lumber price makes it more expensive to build the house.

Because property has been seen as an inflation proof investment by a lot of people, so then people are out bidding each other for houses these days unseen.

And this is just flat out scary when you know that houses needs to be well inspected before making an offer on it from the buyers side.

Usually when we talk about inflation proof items we talk about things that can not be replicated easily, like land, houses, gold ,silver and similar items.

The biggest problems will come for everyday people when these basic item will go up in price and it will truly affect everyday people that are struggling and living paycheck to paycheck.

gallon of gas
Gallon of gas.

So what happens to your finances if the price of a gallon of gas goes up to 10 dollars.

If gas prices triple in a 2 years time that will really affect hardworking American families who have two cars and have to drive a bit to get to work.

This is no joke, there is a real possibility that gas prices can triple in 24 months time, it is political suicide for what ever party is in charge because regular people will suffer a lot from a price hikes like this.

Closing down pipeline projects does not boost confidence into the energy sector to keep gas prices at a reasonable level.

So all of you that now will reply that why are they not taking the bus or the subway to work like we do?.

Wake up big city people, if you live in a rural town you might have 1h to work and 1h from work.

Since there are no public transportations or at least very limited ones, you are really not left with any other option than drive to work.

Milk
Milk

And there is a risk also that a gallon of milk can trippel in price over the next few years time.

Once again it will be hardworking Americans that have to foot the bill for these price hikes.

If you are rich you do not care if the gas costs 10 dollars a gallon or if the milk is 10 dollars a gallon.

But when you are living paycheck to paycheck you are goanna feel the pinch very quickly.

Then for people that are on a fixed income, inflation is very bad because if you are living on a fixed income, that will not be raised more than 3% a year to correct against inflation and if the inflation rate are in the double digits you are in trouble.

If you do not have cash to invest in land or gold you are kind of out of luck.

You will have to ride the inflation train and hope that it will stabilize itself in the next few years.

The FED is Printing money like there is no tomorrow and we can not really go to negative interest rates.

We are as close to zero interest rates as we can be on many markets.

Overpriced homes

So starting to buy overpriced homes is not really a good solution if you have some money to invest at the moment.

The best thing would be to buy gold, silver and some well priced land to sit on for awhile.

But buying a 1.5 million dollar home that will be worth a million after a few years, because you overspent in a bidding war is a great way to destroy your personal finances.

We have seen inflation numbers of 4.5% in April and 5.1% in June of 2021 and these are dangerous numbers even in this V-shaped economy that we are currently living in.

The feeling is that we will see a market correction on the stock market up to a 30% drop over the summer.

So inflation is always very tricky and trying to rap your head around it, IT is very complicated as a market aspect.

Inflation rising

For most US workers that are living from paycheck to paycheck there is not much you can do, other than role with the punches so to speak.

So we have a shaky road ahead of in the upcoming two years.

If you are a small business owner and you are looking for business advisers please feel free to contact true our shop where we have different packages that we can offer you.

https://mrlifeadvise.com/shop/

And if you want to read up on inflation here is a good link on that.

https://www.ons.gov.uk/economy/inflationandpriceindices

Take care out there.

It is never too late to learn.

mrlifeadvise
mrlifeadvise
mrlifeadvise
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