2021 may have been the first time you experienced rapidly rising inflation in your lifetime. For me, it coincided with a six-year wage freeze during contract negotiations, the first time I felt inflation eating away my purchasing power in real-time. Due to wage stagnation and the cumulative effects of that inflation era, I had lost approximately 20% of my purchasing power. Unless you act, inflation quietly erodes what your money can actually buy. And this is one of the reasons why we invest: to regain control against a force we cannot stop.
Have you had the feeling that no matter how hard you try to get ahead you just can’t quite pull away? This is inflation in action. The particularly difficult challenge with inflation is it’s largely out of your control. During that high inflation era after the pandemic, it probably felt like you were running on a treadmill but somebody else had the controls. Just as you felt like you were getting a handle on things, maybe even getting ahead, the controller sped up the treadmill, and you were back to being on your back foot. You’re falling behind without taking a step backwards. The increasing speed of the treadmill is pulling you back. This is one of the important reasons why we need to invest and put our money to work. We need to have our money appreciate faster than it is being eroded by inflation.
Continue reading at:
https://open.substack.com/pub/beyondyourpension/p/inflation-is-like-running-on-a-treadmill?utm_campaign=post-expanded-share&utm_medium=web
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