What Is Inflation-Proof And What Is Not – Episode 286

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[00:01] Welcome to the Prosperity Podcast. Hello listeners and welcome to another episode of the Prosperity Podcast. Kim Butler, are you there with me? I am, Spencer. It is wonderful for us to be speaking and talking about current events, but also talking about things, we should say, principles that will last the test of time. Now one of those things that happens to change, but it only changes from the piece that irritates all of us is inflation. If we understand the principle of wealth and money, well, I guess we can pull back the curtains on it. Today, let’s have a conversation about inflation and how the devaluation of money works. Let’s get into Kim’s head. Well, you know, it’s interesting. We had a client ask this question and we always love to answer client questions.

[01:03] It’s amazing to me because people will come up with this question, I probably hear it once a week, and it often relates back to the life insurance. How can I have an impact on the fact that inflation is going to devalue my money? That is a stated fact. We know that for sure. We just don’t know how much. The answer is that you can’t have an impact on it. There’s really, in my mind, only a few things that we can do to combat inflation. The absolute number one first is to focus on what we can control because we can’t control inflation, we can’t control what the interest rate is going to be on inflation, but we can focus on how much money we’re saving, we can focus on the good things in our lives, and I don’t mean that to be like rose-colored glasses.

[01:56] It’s just that you must focus on what you want, not something that you’re afraid of, especially when that something, inflation in this case, is something that you can’t do anything about. And then I have a couple other really critical things that we can do as well. But is the first point clear that we absolutely must be focusing on what we can control and not be overly focused on the news and the media and all of the talking heads that impact our thinking in a way that really we shouldn’t let them? Absolutely. I completely agree with you on that. So if you look at the other things that you can control, it’s the ability to keep working and it is absolutely the best combat to inflation is the ability to

[02:45] earn another dollar to keep working. So in the short term, it’s to earn another dollar. In the long term, it’s to keep working. And I just see way, way too many people still thinking that they can retire at 65 or even 70 or even 60. And it’s just not feasible. It’s not financially feasible and it’s not good for you. It’s not good for you socially and emotionally. We’ve talked about it many, many times on our podcast. And I can’t encourage people enough to find work they love and plan on doing it for a long, long time. It doesn’t mean that it has to be 40 or 50 or 60 hours a week. It can be 30 hours a week or maybe four days a week instead of five or even three days a week. And yet that is a great way to beat inflation.

[03:34] Now, to circle clear back, how does the life insurance help you? Well, the dividends do have a decent enough level of interest to combat inflation. I don’t know if they’re going to beat it all the time, but there are certainly some there better than the banks pay right now. And then also the death benefit on most whole life policies will increase over time. That will help you beat inflation. Of course, term and universal life policies are level. And so those will not help you beat inflation. But the direct answer to the question is just keep working. Absolutely agree on that. Now, why is it that people tend to forget that, you know, this this cost of living is not going to continue rising and they forget that their skill

[04:28] sets are going to diminish if they escape the workplace? Well, it really is something that people need to be aware of. And one of my favorite resources to help with that problem is Udacity, U-D-A-C-I-T-Y dot com. I got a chance to hear the owner of this company speak. And he has these super cool things called nano degrees that are just little tiny courses that you can take to increase or improve or add to your skill set. And then, of course, many of our listeners are aware of my sister, Tammy Brannon, and her blueprint process and the work that she does and helping people really just either find work they love or find the love in their work again. Because I think sometimes people feel like, well, you know, my career is

[05:20] good, like, I’m OK, but gosh, I wish I could love my work a little more and Tammy can help with that. And even maybe the nano degrees can help with that, because if you can do a skill set or add another skill set that maybe you don’t have, that can really help in that category. OK, so let’s run a quick checklist and let’s let’s create this checklist of what is inflation proof and what is not. You up for it? Absolutely. So I’ll tell you. Oh, you you have the checklist. You’re going to go. I do. I do. I’m in. OK, good. So let’s hear this. What is inflation proof and what’s not? Is the skills that you learn and develop in your career inflation proof? As long as you keep learning and developing.

[06:05] Yes. OK, how about your life insurance policy? Absolutely. And life insurance premiums are actually benefited by inflation because whole life insurance premiums are flat and level. And so inflation will have the impact of making them seem smaller and smaller and smaller as the years go by. OK. How about stocks, bonds, mutual funds? I think one could argue that, yes, they can be inflation proof. The problem is what happens when they go down and then they’re not anything proof. OK, 401Ks. Yes, you could argue that they are inflation proof. OK, how about gold and silver? Oh, that’s a toughie. It just so depends with a big capital D. Yeah, they can be inflation proof, but the control is even less on them

[06:54] because with gold and silver, typically, we’re talking direct ownership, not funds. You are not going to want to sell. What’s funny is, OK, we know you don’t want to sell when they’re down, but what’s funny is people don’t want to sell when they’re up either because then they think they’re going to keep going higher. So I’m going to say no, even though a lot of people would disagree with me. OK, how about money in the bank? No, not at all, not inflation proof. OK, real estate, primary residence. That’s an interesting one. Often not, and yet again, similar to the life insurance, your mortgage payment is actually benefited by inflation. So because of that, I’m going to say yes, absolutely, because that mortgage payment, especially if you have a 30-year fixed,

[07:42] while your check is actually going to have the same number on it every time you write the check to make the payment or do your online work, the impact of that dollar is going to be less and less and less over the years. OK, how about alternative investments where you have your capital? Most of them, absolutely, yes. OK, so if we summarize that list and our listeners will be able to hear and the nice thing is Kim didn’t have this list before. So you’re getting a real emotional reaction. There were a couple on there that were absolutely positively. Yes, this is inflation proof. I thought it was great. Well, thank you. Yeah, great questions. I hadn’t really thought about it as a checklist. And yet right there, we identified some pretty critical components

[08:28] of both what you’re doing with your money from a savings standpoint, especially as a verb, and then also what you’re doing as an investing standpoint, again, as a verb, not as nouns. Now, as we wrap up one of the things that I took away, because I’m going to consider myself a listener on this episode, as well as a participant. But one of the things was a principle of prosperity, which is control. See, and maybe you use I’m sure you spotted it way better than I did, but I thought, oh, wow, OK, all these things were she wasn’t sure about. That’s when you’re giving up their control. Really well said. Yeah, thanks for pointing that out. It does sometimes become such a common part of my thinking that I don’t really realize how critical it is.

[09:14] And without a doubt, things that we can control have more capability of beating inflation. Well, Kim, this was a fun episode. We’ll make sure to put those questions in the show notes so that you guys can understand what may be inflation proof and what may not. Now, one of the things Kim mentioned at the beginning was this was a listener question, and that’s what we absolutely love. So if you do have your questions, please submit them to us at hello at partners for prosperity dot com. And if you’ve already submitted your questions, we got one more thing you could do, which is to leave us a review. Let us know what you think. Anything else from you, Kim? Always grateful for you, Spencer. Well, thank you listeners.

[10:02] And stay tuned for another episode. Thank you for listening to the Prosperity podcast to take control of your money and have it work for you. Visit us at partners for prosperity dot com. If you liked this episode, make sure you subscribe and leave a review.