Blog: Dance with the villain or sing with the hero
There’s a villain on the loose and he’s everywhere you look; at the supermarket when you shop; at the garage when you refuel; on your sofa and in your kitchen; he’s even in your wallet. With his stealth like moves he sneaks up on you so gradually you don’t even notice he’s there. He’s increasing prices everywhere you look and every so often takes a match to your cash and crackles with delight as it goes up in smoke.
This my friends is ‘inflation’, or in other words the rising costs of goods and services over time, expected to rise by 4% this year. Let’s illustrate the impact with a visit to the fridge…
7p would have got you 4 pints of milk in 1919, 4 glasses in 1969 and 16 teaspoons in 2019. Remarkable isn’t it!
£1 in 1986 (the year yours truly was born, and The Communards were topping the charts with ‘Don’t Leave Me This Way’) would be the equivalent of £3 in today’s money. That’s a 200% increase over this time period.
It seems we have a problem! How do we combat this dastardly villain to protect and grow our hard earned money and preserve our purchasing power. With cash returns typically less than 1%, that’s not going to cut it.
Ah but for every story that has a villain, there’s always a hero. Ours lies in the Great Companies of the World (the stock market), and with history as the best guide we have we know this is where we can seek to inflation proof and grow our wealth over time.
This is your call to action. Here’s what you can do to combat this rouge:
1) Invest (20% of income monthly is a good start) and leverage the power of the worlds greatest companies.
2) Sit patiently and ride the rollercoaster which cranks up and rolls down +/-15% on average annually. Only those who jump out mid ride get hurt. Stay strapped in and embrace the journey with the long term trend positive. Our villain clinging on at the back won’t last too long on this ride.
Dance with the villain or sing with the hero. The choice is yours.
Keith Boyes
Managing Director
Chartered Financial Planner
Spentwell.
Now is the time to be your own hero. Get in touch at team@spentwell.co.uk and let’s get your money working harder.
Guidance only. Investing in the stock market does carry a degree of risk and returns are not guaranteed. Be aware and understand the risks involved before participating. If in doubt, please seek professional advice.