As Inflation Continues Reducing The Value Of Your Money, Here’s How To Fight Back

Board, Blackboard, Economy, Inflation, Money

Image Source: Pixabay

I don’t know about you, but I thought fast food was supposed to be a cheap option. In recent months, people have filled social media with stories of restaurants charging outrageous prices for food that was traditionally quick and cheap.

Like $18 for a Big Mac combo. Thank goodness prices aren’t the same at all McDonald’s. Those pricey burgers came from a store in Connecticut, but prices are still going up across the country.

The recent inflation report from the Bureau of Labor Statistics showed the cost of living increased by 0.4% in February. That’s the same rate of increase we saw in January. If this keeps up, inflation will go back up to 4.8% in a year. As I’m sure your wallet doesn’t need me to tell you, that’s the wrong direction.

We’re focused on finding the safest income investments on the market. Inflation is constantly reducing the value of our money. But with the right investments, you can keep up with – and even beat – inflation to maintain your financial freedom and lifestyle.

Today, I’ll show you why you need put your money into investments that produce a growing income to beat inflation and -- protect the value of your money.

Your Money Just Doesn’t Get You as Far Anymore

According to The Economist, the average price of a Big Mac – just the burger, no fries or drink – in the U.S. today is $5.69. Ten years ago, the average price was $4.24 – about 25% cheaper.

The Big Mac has gotten a little more expensive every year. Over the past decade, the average price has risen by $1.45. If you average it out, that comes out to a 3% increase per year. But don’t be fooled. More than half of that increase happened over the past three years alone.

Before the pandemic, we had years of low inflation below 2%. Then in 2021, the price of a Big Mac rose 3%. In 2022, it increased another 6%. And in 2023, it had another 6% jump.

The high inflation we’ve seen recently will quickly reduce your buying power. Especially if you’re retired and living on a fixed income.

Think about it this way. If you had invested $10,000 into long term 30-year U.S. Treasuries a decade ago, you would have gotten a yield of 3.55%. That means you would collect $355 each year in interest.

Ten years ago, that would have been enough to buy 83 Big Macs each year. Today, it would only get you 62 Big Macs. And that number would keep dropping each year. But fixed income isn’t the only option for income investors.

What if you had invested $10,000 into McDonald’s stock a decade ago instead? You would have 103 shares, which paid dividends of $3.24 per share in 2014. Ten years ago, that would have given you an income of $324.

That’s slightly lower than the income from the Treasuries. It would buy 78 Big Macs in 2014. But here’s the difference 10 years later. McDonald’s has increased its dividend every year since. Today, that investment in McDonald’s stock pays $6.68 per share in dividends.

So those 103 shares would give you an income of $688 – enough for 121 Big Macs this year.

That’s not all. Over the past decade, McDonald’s shares have nearly tripled in value. Meanwhile, the Treasury bonds will still be worth just $10,000 when they mature. So even though inflation means the cost of goods keeps going up, your income can keep going up, too.

Put This Wisdom Into Action Today

That’s the power of investing in reliable companies that grow your income and compound your wealth. Now, I’m not recommending you invest in McDonald’s right now. The company has a fantastic business, but its stock isn’t on sale. It trades at 23x earnings. That’s about 10% above its historical average of 21x earnings.

That’s why I’m staying away for now. But when McDonald’s makes it back onto the value menu, I’ll be sure to let you know.

In the meantime, I’ve recently recommended several attractive dividend growers.

Such as 5.6%-yielding Vici Properties (VICI), which collects rent from casinos. And Cisco (CSCO), which is meeting the growing need for cybersecurity. It yields 3.2%. Or you can get a 2.9% yield from Comcast (CMCSA), a company that’s about to collect billions in government funding to deliver high-speed internet across the country.

Those are all great recession-proof businesses that can help you start building a portfolio that will produce a reliable growing income to keep up with inflation.

More By This Author:

AI’s Energy Needs Are Increasing, And Companies Like This Will Profit
Water Utilities Are Getting Ready To Raise Costs, But You Can Profit From These Changes
You Don’t Have To Gamble To Profit From An Increase In Sports Betting

Brad Thomas is the Editor of the Forbes Real Estate Investor.

Disclaimer: This article is intended to provide information to interested parties. ...

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.