I’ll warn you up front: If you’re into mainstream pundits like Dave Ramsey and Suze Orman, you’ll find this chapter confrontational. I’m betting, however, that you wouldn’t be reading this book if you weren’t open to alternative ways of thinking. So this chapter will either make you angrily toss this book in the trash, or be thrilled to see investing from a new perspective that actually works.
Everyone else is telling you to accumulate a large nest egg over the course of several decades, then draw down that nest egg for retirement. They’re telling you to diversify in crap like mutual funds and 401(k)s. They love to harp on how amazing compound interest is, yet every example they give to explain it is based on criminally flawed math. Education has become job training for the five-day workweek, and the mainstream investment philosophy is based on a 30- to 40-year job plan.
Most people are brainwashed by financial “gurus” who pitch either get-rich-quick schemes or get-rich-slow products. I teach you how to get rich smart.
You know that 5 Day Weekenders operate on completely different fundamental assumptions than most people do. Our objective is to find investments that give us independent cash flow now, rather than accumulating for future cash flow. We want control over our financial destiny. We don’t want to sit and wait for the stock market to cooperate with our goals. We don’t want to be blind- sided by inflation and taxes, as so many conventional investments expose you to. Never be tethered to conventional thinking.
Inflation plays an integral part in determining the health of an economy. The government manipulates data and systematically under-reports the true level of inflation. The government-issued consumer price index (CPI) has remained in low single digits for the last decade. But real economic data suggests otherwise. Devaluation of money, higher taxes, increased college tuition, rising housing prices, rents, higher costs of living and exorbitant health insurance suggests the real inflation rate could be running as high as 9% annually.
Inflation, the invisible assassin, cannot be seen or felt. This stealth predator loiters unabated by assassinating the purchasing power of your hard-earned after-tax dollars. No money actually leaves your bank account. Yet every single day, your purchasing power is being stolen from you.
Inflation is dangerous. In fact, $1 in 1913 is worth about $.03 today. With the removal of the Gold Standard to the Debt Standard Fiat currency system, a $100,000 savings in 1971 only has the purchasing power of $16,667 today. In light of inflation, there are other considerations that erode your purchasing power:
- Planned obsolescence: Products needing to be constantly replaced.
- Technological advances: Future purchases that don’t even exist today.
My rule of thumb is to ensure you generate a minimum return of 9% per year growth to combat inflation. Anyone achieving less than 9% is going backwards. This is how the American middle class has been economically obliterated. (Also note that most advisors don’t account for inflation in their calculations.)
In my next post, I offer a few of the reasons why I find most conventional investing to be at best flawed.
I’d love to hear your thoughts – are you someone who’s planning for retirement? Or are you planning to live life to the fullest now? Thank you for sharing!
Secure your copy of the “5 Day Weekend” book. 5 Day Weekend: Freedom to Make Your Life and Work Rich with Purpose [Nik Halik & Garrett Gunderson]