What I see is so many Americans is them just trying to maintain a lifestyle and be happy if they can take a vacation for the year. Most are just accepting the fact they will work as long as they can because they won’t have enough to retire.

What I don’t see is them looking at why they won’t be able to retire and figure out a way to get there. Are we feeling so helpless we figure there is nothing that can be done beyond what our brokers and pundits tell us? This leaves us with going to work, paying our taxes, spending the net income we make and repeating the cycle. Never asking why this is the way it is.

That is what this little blog post is going to clear up in English, what is happening to our dollar and why we have to work harder and longer for money.

First, we are hearing in the news that the market is at all-time highs because the Federal Reserve is printing money to make the market look good.

Here are a couple of graphs. The first graph shows how much money has been printed since 2009 and the second graph shows how the market has been increasing since that time.

money printing since 2009

Market increasing

What you will notice is that as money is printed the market flourishes. You are told this is great for all because that is where most of the money for retirement is stored and your option to retire is looking better by the day.

But is it?

There is this little thing called inflation. What is inflation? Most people will explain inflation as the cost of goods going up. Sadly that answer is incorrect. The simple definition is: needing more dollars to buy the same item because the dollar is not worth as much. The long definition is:  the value of the dollar is going down due to excessive printing of money. The more dollars printed the less the dollar is worth, causing the need for more dollars to buy the same item.

The chart below illustrations this point. As you can see in the graph below the dollar value is going down. Now look again at the chart of money printing. As money printing goes up the dollar value goes down. There is no better way to show you how the two co-inside and what causes inflation.

2009 to 2013 purchasing power

 Now let’s look at how this ties in with purchasing goods. As you see on the graph below if it cost you $1.00 to buy a candy bar in 2009 today that same candy bar will cost you $1.08. The same candy bar now costs you 8.4% more! That 8.4% is the rise in inflation in just a 4 year period of time. (Not to mention that candy bar got smaller too.)

Inflation calculator

 That my friend is the English version of inflation.

You get a 4% increase in pay if you are lucky to even have a job, and you are not even keeping up with inflation. Your stocks are making money but are they increasing more than 8.4% AFTER the fees and taxes are taken out? If not, that is not going to help you either. Looks good now but long term it needs to perform at a steady rate because you can’t afford a drop when you are trying to keep up with an 8.4% inflation rate.

I hope this cleared up a few things and made them easier to understand. There is no longer a reason to be stuck where you are or giving up on understanding. You can better your financial life.

It’s not about making that great rate of return. It’s about keeping more of the money you earn and giving less to others.  Approximately 98% of the money you make goes to taxes, debt, and lifestyle the other 2% is what most Americans are saving. If you were able to keep an additional 15% of that money you would be ahead of inflation, wouldn’t you? A bonus, you would be doing that all without risk.

Yes, it is that simple.  If you are ready to see how that is done contact us today.