Inflation: How to prepare?

15 years ago

Dave suggests that inflation in our future.

#1. That's right, Dave has reached the point that you merely need to say his first name in this forum. Kinda like Cher or Madonna... or rather, Sting.

#2. More to the point: So what are the strategies best suited for inflation? Gold? Specific sectors of the stock market?

Sort by:Oldest

Comments (10)

fandlil
15 years ago
Gold, about 5% or less of your investment assets. Could be gold coins (American Eagle, Canadian Maple Leaf, or whatever); or, an ETF that's indexed to the price of gold. I bought our coins before the ETFs were around. Today, I would opt for the ETF, because it's easier. With coins, if you're selling, you have to ship them & insurance costs a lot. Another alternative is something like Vanguard Precious Metal mutual fund. That one invests in gold mining stocks and stocks of companies of other precious metals like platinum, nickel and a bunch of others I've never heard of. It's a little less volatile that a straight gold strategy, because it's diversified across the other metals.

Of course Energy prices are also likely to rise, so something Vanguard Energy mutual fund might be good. It soared last year when gas was selling at $4/gallon, and then fell when the price of gas declined.

As for me, we bought our gold a few years ago, and some shares of Vanguard Precious Metals and Energy funds. So I think we're set. I didn't "plan" for inflation. I just assumed about 10 years ago that some day if there is a collapse in the economy, gold could go to $2-3K per ounce, or even more. That's when I'll sell to meet living expenses, so I don't have to sell stocks at a loss to make ends meet.
dave_donhoff
15 years ago
Hi Kelton,

#1. That's right, Dave has reached the point that you merely need to say his first name in this forum. Kinda like Cher or Madonna... or rather, Sting.

HAH!!!! (Leaving aside Sting comparisons regarding trantric accomplishments....)

"BEST" and "easiest" are different questions.

EASIEST are precious metals (the specie, not paper proxies. Actually, proxies are the easiest, but least secure.)

BEST (in my opinion) would capture the benefits of monthly cashflow/yield, leverageability (more control for less of your own cash, and using a locked balance of other's cash which is decaying at the rate of inflation. The BEST asset for this purpose is residential rental real estate.

Cheers,
Dave Donhoff
Leverage Planner
Related Discussions
When and how do you harvest echinacea- how do you prepare roots?
Q
Comments (1)
Here is an easy to understand guide for echinacea http://www.gardenguides.com/articles/coneflower.htm I really recommend you cut the root up before drying... you will need a hacksaw to cut it up when dried! :o) for contraindications http://www.herbmed.org/Herbs/Herb6.htm I know it stops working after like 8 days, so really short term is all that is needed.
...See More
How To Prepare Soil in San Diego?
Q
Comments (19)
porewit, et al: 1. I'm a firm believer in "right plant, right place". That is, San Diegans have a certain kind of soil and they shoudl stick to plants (overall) that are adapted to that kind of soil (heavy and neutral/alkline). The good news is, there are thousands of plants that fit that kind of soil. I think California gardeners, in general, make too big a fuss about the pH of our soils here. 2. Gypsum does not break up clay nor soils cemented together by iron oxide or calcium carbonate. Gypsum is used to break up soils that have no structure due to an abundance of salts (we call them "sodic" or "alkali" soils; not to be confused with "alkaline" soils). The gypsum replaces one ion for another (much as with water softeners) and allows such unstructured soils to develop a structure (flocculation). Our soils do NOT need calcium. 3. Sulfur doesn't really change pH significantly and it definitely doesn't work to alter pH over the long run. 4. The "tip": mulch (a verb). Mulching with a semi-decomposed organic material changes, at least subtlely, the chemistry of the soil and does, indeed, allow nutrients such as calcium and iron and other micronutrients to become available to the plants in the soil. Aside from choosing the right plants (see above), this is the best thing you can do for plants that DO need a slightly different soil chemistry. 5. Yep, some of our soils are high in potassium and that can be toxic to some plants. Not a lot of plants, mind you. A few special Australians. But again, it's all about right plant, right place. Joe
...See More
New to Dahlia gardening, when and how to prepare for over wintering?
Q
Comments (2)
Yes, do a youtube or google search! There are several ways to do this and it would be so much easier for you to learn by watching a step by step tutorial than by trying to read our instructions lol. I've tried a couple of ways - in peat moss in plastic bags, in styrofoam coolers, and some other ways I've forgotten - I almost always lost them despite others swearing by these methods. The year with the plastic bags, I finally bought a few tubers over the winter, expecting to lose mine, and of course since I bought some, mine overwintered fairly well haha! I had gotten into the habit of treating dahlias as annuals, but last year I grew flowers for my daughter's wedding, and planted about 80 dahlia tubers. I felt compelled to try to save them lol. So I googled, youtubed, etc., and settled on layers of newspaper and peat moss, with the tubers in the peat moss, all layered in large cardboard boxes (about 2'x2'x2'). I still can't find eyes, so I cut the bunch of tubers into quarters down the neck, and dealt with that this past spring. I had quite good success with this method, but you may find some other way that works for you. I'm thinking of trying the saran wrap method this fall, but that means you have to really separate the tubers, so I'm not sure I'm up to that lol. So much easier to find the eyes in spring, IMO. Good luck! :) Dee
...See More
How to prepare bathroom stones with bamboo bath mat
Q
Comments (10)
Hello Illes! Your bathroom looks lovely! From your photograph, it looks like you have tile in your shower area now. You certainly can use teak floor mats outside the bathtub, and another one outside the ledge of the shower area. I don't understand why you want to stand on a wooden mat while you are showering, that doesn't seem necessary to me. Are you afraid of slipping? You should have chosen tile for the floor in your shower and bath areas that is resistant to slipping. Did you? As for wooden floor mats, and wooden seats, teak is far superior to bamboo. Some of these bamboo floor mats are constructed with battens on the bottom running perpendicular to the planks on the top so they don't sit flat on the floor in the water, and they often have thicker edges so after you are done in the bath or shower you can stand them on edge if you like to enable them to drain although that shouldn't be necessary. As in any bathroom, it is advised to run the fan for at least 20 minutes to get rid of humidity.
...See More
western_pa_luann
15 years ago
Dave!
I had no idea you are that famous!
dave_donhoff
15 years ago
In my own little mind I be ;~)
D
C Marlin
15 years ago
In my own little mind I be ;~)
D

Ohhhh, the wonderful power of the internet...

may yours be longer than 15 minutes.
behaviorkelton
Original Author
15 years ago
Being a landlord?

That is certainly not the easy way, but it is an interesting idea.

I'm thinking of refinancing my paid-for house at this crazy low rate. At this "rate", it is hard to argue against it...right?
dave_donhoff
15 years ago
Hi Kelton,

I'm thinking of refinancing my paid-for house at this crazy low rate. At this "rate", it is hard to argue against it...right?

Ahhhh Kelton... while it *MAY* be hard to argue against, I'm QUITE confident there'll be PLENTY of folks who'll step up to the plate and have a swing... ;~)

Dave
behaviorkelton
Original Author
15 years ago
Well, let's say that one finances their paid-for house, but does nothing special with the money received. Just a money market getting well under 2%.

Does this have any merit?... or does refinancing demand that the money get invested in a riskier prospect?
C Marlin
15 years ago
Well, let's say that one finances their paid-for house, but does nothing special with the money received. Just a money market getting well under 2%.

Does this have any merit?... or does refinancing demand that the money get invested in a riskier prospect?
Doing "nothing special with the money" is not using it to its fullest advantage, not good leverage, you're going to pay more than 2% for your money. What is the advantage, it is only good to hold it there while looking for your real investment.
Residential real estate is not a risky prospect, the tenant is paying your mortgage, over time your RE will increase in value.
Risky is buying in a bad area (Detroit comes to mind), or buying for the short term. It is possible to find very good, stable tenants, buy in a desirable area. I don't know your area, but in mine RE gives so many benefits. I don't know the future prospects of the tax advantage, but in the past it has been good.
dave_donhoff
15 years ago
Hi Kelton,

Well, let's say that one finances their paid-for house, but does nothing special with the money received. Just a money market getting well under 2%. Does this have any merit?...

It *might*... which brings a few questions to the forefront;
A) WHY would someone "do nothing special" with their equity?
If it is because there is nothing CURRENTLY that beats a 3% after-tax cost of money... what is the likelihood of inflation dramatically increasing rates (paid on deposits) in the future? It is EXTREMELY likely, I would suggest. When that time comes, the window of opportunity to CAPTURE the 3-4% mortgage leverage will be a distant memory.

B) If your cost of money is 3-4%, and your "nothing special" yield is 2%, you have a current NET cost-of-liquidity of 2%-ish. When you run into either a super-duper opportunity in the future (let's all hope!) or a super-duper emergency/tragedy in the future (God forbid... but better to be prepared,) then how much is that available-cash worth to you at that time?

If its tied up in your real estate, what will it THEN cost you to access it (if you even qualify at that time, considering the character of the "emergency.")

If you have to use alternative borrowing because its inaccessible, what might THAT cost you at that point of desperation?

If you simply cannot access your equity from ANY resource, and you suffer the consequences of the desperation or emergency at that future point in time, what is your potential scope of losses?

Lots of "IFs" to consider... but a current 2%-ish "cost of safety & security" (which is very likely to become a positive rate of return whenever inflation hits, or a "safety net" in cases of emergency) is relatively safe & boring in comparison. Superior "insurance" in my mind.

Cheers,
Dave Donhoff
Leverage Planner

Inflation: How to prepare?

Comments (10)

fandlil

dave_donhoff

Related Discussions

western_pa_luann

dave_donhoff

C Marlin

behaviorkelton
Original Author

dave_donhoff

behaviorkelton
Original Author

C Marlin

dave_donhoff

COMPANY

BUSINESS SERVICES

GET HELP

CONNECT WITH US

Inflation: How to prepare?

Comments (10)

Related Discussions

behaviorkeltonOriginal Author

behaviorkeltonOriginal Author

COMPANY

BUSINESS SERVICES

GET HELP

CONNECT WITH US

behaviorkelton
Original Author

behaviorkelton
Original Author