Inflation Protection and Wealth Insurance

Check back weekly as we post short videos as a way to delve deeper into our Power Hour. This week – we’re focusing on how to protect yourself against inflation, and I discuss best practices for insuring your wealth as you plan for your post career life!


Inflation Protection and Wealth Insurance

Inflation has been crazy going out this year, people have seen it and felt it in many ways. The fear is how do you keep up with inflation?
There are two different ways that we want to cover how to answer that question.

Inflation Protected Stocks

One is inside your investment portfolio.  One of the best ways that you can set up your portfolio to keep up with inflation is to be invested in inflation-protected stocks.
An example would be health care. People are still going to get their medicines and go to the doctor even if there’s inflation, we still are going to take care of ourselves. So, health care is one of those kinds of inflation-protected industries.
Then there are consumer staples, we all need certain things to live.
Materials and energy are also good because as inflation goes up, they go up.
So being in those right companies, right sectors, helps inflation protect your portfolio.

Wealth Insurance – Gold and Silver

The second way to hedge against inflation is with wealth insurance, aka physical gold and silver coins.
Gold and silver have, for a long time, been thought of as an inflation hedge or wealth protection. They are very consistent and going up in this value.
This isn’t a quick growth investment strategy, but for that steady increase over time.
For example, when the Mustang came out in 1964, they were about $25,000. The same amount of silver coins that was used to buy the car in 1964 would give you about $95,000,  enough to buy the top-of-the-line Mustang and probably still have money left over. Gold is now valued at about $135,000 versus $25,000.
Gold, for a long time, was the standard for money. If we go all the way back to Rome, their Centurions were paid in gold coins for the year, and about 18 gold coins per year, which would equate to about $75,000. Today, that is the average salary for army officers.
So, you can see gold and silver both kept their value over time. Our currency used to be backed by gold and silver until the creation of the Federal Reserve. Now what we call the US dollar is really the Federal Reserve Note, it’s a fiat currency meaning it’s not backed by anything. The majority of the currencies in the world have been run for years until recently when Russia changed and went to back their currency by gold, which sets a floor for gold.
Whether you like Russia or not, this is positive for the gold world, and you’re seeing some other countries maybe take note. It’ll be interesting to see how this progresses.
In recap, two ways to protect yourself from inflation to ensure your portfolio is to invest in inflation-protected stocks, and buy some physical gold and silver coins, about 10 to 15% of your overall portfolio is what is considered a good amount for wealth insurance.
Next week, we’re going to talk about the difference in owning physical coins versus an ETF and what’s the difference between investing and collecting.



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