In 2021 the U.S inflation rate was 4.7 Percent compared to just 1.23 in 2020. While the CPI data isn't out yet for December 2022 the latest reading shows Us an annualized inflation rate of 7.1 Percent in 2022 but what exactly does This mean let's take a look at an Example using eggs well inflation is a Loss of buying power meaning each dollar Is going to buy you less of something For example in 2020 you could buy eight Eggs with one dollar today you can buy Two and a half eggs with that same Dollar however this is a very specific Example looking at just one commodity Let's now consider what happened to ten Thousand dollars worth of buying power Over the last two years let's assume you Ended 2020 with 10 grand in your bank Account well 12 months later that's Going to be worth ten thousand twenty Four however your buying power was Reduced to around 9 500. one year after That your balance would be around 10 048 But your buying power would be just Under 8 900 dollars so even though you Would have seen your balance grow by 48 Dollars and some change on paper you Actually lost over eleven hundred Dollars worth of buying power that's why Inflation is scary over a tenth of your Buying power disappeared in two years so What can you do about it we're going to Be covering how to inflation proof your
Portfolio in 2023. this video is Sponsored by fundrise but more on that Later now depending on who you listen to For news and information you might think Inflation is going to cool off in 2023 While this is possible keep in mind that Inflation came in way hotter in 2022 Versus what was expected many expected Five percent inflation in 2022 but we're Probably going to come in around seven Now Janet Yellen the secretary of the U.S treasury recently discussed a major Inflation cooldown expected for 2023 but Nonetheless even a three to four percent Inflation in 2023 could be detrimental To your wealth so what can you do to Prepare let's dive in now so first of All knowing what to do with your cash During time times of high inflation is Crucial if you leave it sitting there in The bank the buying power vanishes over Time if you invest in the wrong asset it Vanishes immediately knowing what to do With your cash during times of high Inflation is extremely important so that Being said here's a few cash allocations You should consider in your own life bug Out money you can put it in your Backyard in a coffee can or tuck it Under your mattress but it has to be Physical cash and then you have the four To six month emergency fund which you Have to adjust for inflation now as far As your day-to-day spending I wouldn't
Worry too much about avoiding inflation Because using your money now is actually Going to be a good hedge against future Price increases but what you can do is Use a credit card to take advantage of Any cash back to hedge against inflation So if inflation was three percent in 2023 but you got one percent cash back On everything you bought you really only Had two percent inflation and finally we Have the all-important war chest this is Your cash to deploy on investments once You find the deal of a life time and When you do start deploying that war Chest think about dollar cost averaging There's a big difference between Dropping 10 grand into the market at Once and then 1 000 over 10 months next Up on the list we have bonds James Bonds Now you may not think bonds are an Exciting investment however something Called I bonds skyrocketed in popularity Over the last two years and this is a Specific type of us treasury bond Designed to protect your buying power From inflation here's what you need to Know about ibots first the rate updates Twice per year and it currently sits at 6.89 interest second your money is Locked in for a minimum of 12 months you Lose three months of interest if you Cash them in before five years finally You can buy 10 000 per year per social Security number and then an additional 5
000 with your tax refund be sure to Check out my full video about I Bonds in The corner for more so I bonds can be a Great option for protecting your Medium-term savings against inflation However you should also consider your Stock and bond allocation within your Investment Portfolio the traditional Advice for this is to take 120 minus Your age and this gives you the Percentage of your money that you should Have in equities if you are 20 years old For example you probably have a hundred Percent of your money in stocks and Nothing in bonds but at age 25 you might Want to consider a five percent Allocation into bonds and by age 40 You're talking 20 bonds eighty percent Equities a lot of people are 100 in Equities regardless of their age and They don't realize what that does in High inflation keep in mind that bonds Are important for downside risk Protection and this gets more important As you get older so now we should talk More about these stocks or equities well We know that the S P 500 has returned 11.88 on average dating back to 1957. so Does that mean that stocks are the Ultimate inflation hedge not quite what This percentage fails to convey is the Boom and bust cycles of the stock market For example in 2008 the S P 500 had a Negative return of 33.4 percent but
Despite even that those who were Invested in a well-diversified manner Continued to make money in the long run In the very long term Diversified stock Portfolios will outpace inflation However in the short run inflation Destroys equities especially growth Stocks so instead of thinking about Individual stock picking what I Encourage you to do is think about your Overall percentage allocation into Stocks and bonds in this stock and bond Allocation is going to become your Exposure to what's called public Equities however you certainly do not Want to put all of your eggs in one Basket and put all of your money into These assets these are highly liquid Assets meaning they're very easy to buy And sell however as a result that makes Them extremely volatile with massive up And down price movements when the market Is freaking out hey guys real quick Before we get into the next strategy I Recently found out that about 89 percent Of the viewer viewers on my YouTube Channel are not subscribed so if you Could do me a huge favor click subscribe Down below hit the bell and then turn on All notifications so you don't miss a Single video thank you so much real Estate as an asset class is well Positioned for high inflationary times You basically have built-in inflation
Protection because you can simply raise The rents and when rents go up cash flow Goes up too since commercial real estate Is largely valued based on this cash Flow it makes the real estate more Valuable so more rents more cash flow Higher value however it's often Difficult to gain exposure to this asset Class and if you want to invest in real Estate but don't know where to start Today's video sponsor fundrise could Help fundrise has a six billion dollar Portfolio as well as a massive war chest Of cash to deploy the team of real Estate experts is eager to make high Value Acquisitions in 2023 on behalf of Fundrise investors so if you're ready to Build a portfolio to hedge against Inflation visit fundrise.com Ryan Scribner or use the sponsored Link in The description below so what is it About real estate that makes it a good Hedge against inflation that is because With real assets the value is clear and Undeniable now real estate is of course A real asset but a few other examples Include land and Equipment examples of Financial assets include stocks bonds ETFs and even cash so what you can do is Simply learn more about these real Assets as they hold up way better during Inflation I did a video on five real Assets a few days ago so check that out In the corner so the last thing I want
To leave you with is this while Inflation was pretty much a non-issue For the last 30 years it's a problem now And this could lead to some portfolio Adjustments or even lifestyle Adjustments if you find that you can't Stay afloat with this inflation and so Understand that inflation is going to be A part of our lives for at least the Next decade be sure to check out today's Video sponsor fundrise via the link in The description and below if you want to Start investing in real estate thanks so Much for tuning in subscribe and hit That Bell and turn on all notifications And as always I hope to see you in the Next video
