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For many people, saving isn’t going to be enough.
Many of us can remember watching Roadrunner cartoons. In particular, I recall one gag that got used pretty often involving a train.
Allow me to set the scene. Wile E. Coyote built a house on a train track for the purpose of luring the Roadrunner to his death.
As it would happen, the hapless Coyote then ends up in said house while the train barrels toward it.
This fact, Wile E. Coyote confirms by looking out the window. Yet, instead of diving out of the window in that very moment and getting clear of the impact, he uses the precious few moments he has to close the blinds on the window as if pretending to not see the train coming is some kind of solution.
What if the Roadrunner were a metaphor for achieving a work-optional-lifestyle, and traditional attempts to catch him placed each of us on train tracks where we’d predictably get hit by a thousand-ton train if we failed to get off the tracks?
Would you pull down the blinds when you saw the train coming and assume it was too late, or would you get off the tracks as quickly as possible?
Well, I’m about to show you the train.
Stop reading if you know you’d rather pull the blinds.
For everyone else, you’ve chosen the red pill… welcome to the truth.
This past week, a client in my practice, an electrical tradesman, was sharing with me that the price of copper, which is a foundational metal for computing and electrical infrastructure, had increased by over 50% in the last year. Housing prices have gone up by as much as 40% in some areas in the last year. Gas prices have gone up by 40% in the last year.
So, are any of you still buying that historical rates of inflation based on the consumer price index are accurate when if you look it up right now, it says that inflation is only 4.2%?
If it seems to you that income hasn’t kept up with cost over the past few decades even though the historical inflation rates suggest that they have, I invite you to trust your own eyes and ears.
For anyone hoping to create a work-optional lifestyle, you have to address the uncomfortable math of inflation and build a solution into your portfolio.
Billionaire investor Warren Buffet said that, “the best way to address inflation is to own the companies that create it.” He also said that, “if you don’t figure out how to make money while you sleep, you’re doomed to work forever.”
While I’d love to unpack these two statements, it’d probably be best in a live, interactive format or class. For now, here’s two things that you can do to avoid your future being tacitly crushed by inflation.
Maximize Your Upside - When you save money, consider where you’re saving it and how the vehicle of your portfolio works as a whole. If the opportunity to be in the catch zone for all big market returns isn’t present in a large part of your portfolio, that vehicle likely doesn’t have enough gas to get you where you’re going. This deficit is especially true if the vehicle doesn’t have a system of managing or eliminating the risk of market loss at the same time.
Maximize Your Impact – For many people, saving isn’t going to be enough. Spending a few years in your working life to build and develop a business that can create a growing, predictable income into your future isn’t just some habit of the wealthy. It’s increasingly becoming a necessary action to ensure that the future you want is even possible. Yes, it is hard to do. I would submit that so is being broke in your senior years, so while you still can, pick your hard.
If you would like to avoid the pending impact of the inflation train, but aren’t sure where to start, I’m happy to connect to see if we’re a good fit to walk forward together. At the very least, you’ll learn a thing or two.
Kelechukwu “Chu” Oparah is a Licensed Financial Professional Serving your Dayton Community. For more content, Chu is on Instagram @chuoparah.