Today’s inflation rate of 7.5% is *significantly* higher than the 2% level of inflation that most policymakers target. Prior to this, we’ve experienced a decade of low and stable inflation. But, as much as people are complaining about today’s gasoline prices, can you believe that inflation was MUCH higher in the past?
Will the trend of higher inflation continue? We have no idea. Some of the most well known investors and economists have opposite viewpoints when it comes to this. Cathie Wood believes we will experience significant DEFLATION in the coming years. Goldman Sachs thinks inflation will come down as the year progresses. But others, such as BlackRock and former Treasury Secretary, Larry Summers, think that inflation could remain at an elevated level for a while to come. So, long story short, only time will tell what inflation does going forward!
What does all of this mean for your investment portfolio? What you don’t want to have is a heavy cash position. At this rate, cash in the bank is set to lose half its purchasing power in just nine years! The best path forward is to stick with your investment plan and buy and hold index funds.
As always, reminding you to build wealth by following the two PFC rules: 1.) Don’t invade sovereign democratic nations and 2.) Don’t succumb to hateful propaganda.
-Vivi & Shane
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