How Are You Going To Keep Up With Inflation?

It’s been a long time since anyone has had to worry about keeping up with inflation.

As you can see from the chart below, the recent 5.4% reading of the consumer price index is the highest inflation reading since 2008. And other than a short blip in 2011, inflation has been mostly nonexistent for more than a decade, spending most of the time below 2%.

U.S. Consumer Price Index

That has changed suddenly as the world reopens. As fast as an uncoiling spring, people are opening their wallets to begin living the lives they’ve been denied for the past year.

Inflation is on everyone’s mind today, and that 5.4% figure doesn’t begin to tell the story. Prices are higher in nearly all walks of life – and in some, they’re up considerably. Have you ordered from a restaurant lately, considered buying a car or booked a hotel room?

Wall Street experts and economists are all talking about inflation today, yet almost no one was when I warned readers of my Oxford Income Letter last year that “inflation will be here sooner than most expect” and when we started positioning our portfolios accordingly.

Fed Chair Jerome Powell doesn’t share my concern, as he has vowed to keep interest rates near zero. Great news if you’re looking for a mortgage. Terrible news if you’re hoping your investments keep up with inflation.

Treasurys – a staple for conservative investors – pay nothing. The 10-year Treasury yields just more than 1.3%.

But even more aggressive bonds aren’t keeping up with inflation.

The average high-yield (junk) bond yields less than 4% today, down from nearly 6% two years ago (before the pandemic).

So where can an investor obtain a relatively safe yield that will keep up with inflation?

The strategy behind both is my 10-11-12 System, which is focused on dividend growth for the exact situation we find ourselves in today. It shows investors how to earn 11% yields within 10 years or 12% average annual returns in 10 years with dividends reinvested.

1 2
View single page >> |

Disclaimer: Nothing published by Wealthy Retirement should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not ...

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.