Weekend Reading – Inflation isn’t going back to normal
Welcome to a new Weekend Reading edition: inflation isn’t going back to normal.
You can find some other popular recent reads below:
Should you consider an All-Weather Portfolio? What is that anyhow?
I also recently shared why if you focus on just investing inside your Tax Free Savings Account (TFSA), you could end up being a millionaire after investing $125 per week. Read on in this maxed out TFSA edition.
Finally from earlier this week, I shared how and when to withdraw from your TFSA or RRSP (the latter is better) for any semi-retirement or retirement plans. Check out that monster post for a host of reasons why the TFSA “wins” – keeping your TFSA “until the end” – as an investment account.
Have an awesome weekend!
Mark
Weekend Reading – Inflation isn’t going back to normal
I found this article of interest after reflecting on my grocery shopping trip yesterday, thinking about how much grocery prices have climbed in the stores – with little end in sight. There are suggestions that inflation isn’t going back to normal anytime soon.
I hinted such statements about inflation were ridiculous by experts last summer – far from transitory.
My Twitter reference, excuse any typos or grammatical errors 🙂
I believe the key reason why inflation will continue to be higher than “normal” is because our central banks are incapable of action, last year, or this year. I’ve shared my displeasure with our Bank of Canada on this front, but my rants on this blog won’t change anything. Rates aren’t going higher here fast enough anytime soon to curb inflation.
What are spenders, savers or investors to do?
As spenders (and the need to eat food!) if you haven’t already considered it then experiment with more plant-based dishes on your kitchen table. I think that’s one easy way to reduce any financial pain when shopping. Beyond that, instead of buying and eating lots of red meat, buy chicken or pork as well (since they haven’t risen nearly as much in price at my store anyhow). A simple trick for you might be to research food items that have gone up in price, in advance, before you shop and buy less of that.
Another timeless personal finance hack is to simply cut back or cancel unused subscriptions or memberships. I’ve also got 24 other ways to be a cheapass here – saving your bank account and our planet in the process.
As savers and investors, I’ve already written about my plans as an investor to combat higher inflation so I’ll repost my thinking below in case you want to correct your portfolio a bit.
This was my plan to invest for higher inflation. A plan I already put in motion some time ago…
Inflation will eventually level-off (exactly when I don’t know) but this higher inflationary period is also a great time to see how your portfolio / income streams might be sustained in any future years, including semi-retirement or retirement. I hope to post some case studies on that in the future to show you just how dangerous inflation is, as one wealth-killer, to your future financial self.
Read on about other wealth-killers you have to watch out for in Beat the Bank – a fine read of a book by fan of this site and former banker himself, Larry Bates. Larry was also kind enough to share how he invests to combat wealth-killers in that link above too.
Thoughts on inflation? Thoughts on inflation when it comes to your portfolio’s long-term viability? Do share in a comment folks! I read every single one of them 🙂
More Weekend Reading…
Even though my TurboTax Canada giveaway is now over and I’ll be selecting the winning names this weekend a reminder I still have this juicy 15% discount on TurboTax Canada tax preparation software this year for the coming months.
Congrats to my friend Tawcan with these outstanding milestones in his 2021 year in review. From his post:
“In 2021 we received $30,912.20 in dividend income. This amount covered 79.4% of our necessities/core spending and 43% of our total spending.”
Remaining on the dividend income update front, Our Life Financial is earning a bundle from her investments.
I believe she very wisely strives to max out contributions to her Tax Free Savings Account (TFSA) for investing purposes. Using the TFSA as an investment account is just one simple way the TFSA “wins” in any RRSP vs. TFSA investing debate.
On that note, Cashflows & Portfolios covered that here: 3 BIG reasons why the TFSA wins over the RRSP.
In summary:
- Every adult Canadian should take advantage of the TFSA.
- Many adult Canadians should take advantage of the RRSP where it makes sense.
A nice shoutout to GenY Money for including yours truly in her recent PF roundup.
Always interesting to read if anything is making sense in the markets these days – with thanks to Dale Roberts.
Helping Ukraine
I’ve already made my donation (and will continue to do so….) to help millions displaced from Ukraine. If you have the means, I encourage any financial contribution to the Canadian Red Cross, Canada-Ukraine Foundation, Global Medic or another responsibile charitable organization of your choice that can help make an impact.
I’ll be back soon with another answer to another reader question as well in future articles.
Have a great weekend!
Mark
Mark
My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I've surpassed my goal and now investing beyond the 7-figure portfolio to start semi-retirement with. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.
Hey Mark, great post as always, just read ur tips on saving, making coffee at home no brainer, that 2.02 for medium black at Timmy’s adds up. I needed to hear that!
Thx
Brad
LOL. Well, my coffee pods cost $1 at home so not getting ahead too much!
Stay well Brad.
Mark
Inflation is nasty. Supply problems abound, but much of the cause is the incredible money “printing” that has occurred since COVID began. The last financial crisis gave our leaders the impression that you can spend yourself out of a recession with no downside wahtsoever. Now the chickens have come home to roost, and the costs fall largerly on the lower and middle class.
I think there is a serious downside (starting to happen now more/has been happening) and unfortunately those that are less fortunate pay the price (as you refer to) although they don’t realize it at the time when the government is handing out money.
More bad news to come…
Stay well Loonie 🙂
Mark
While we are still working, inflation is not a problem. Our saving rate is pretty high, inflation will just decrease the saving rate which will still be pretty high.
Once we retired, it will be a different story. Hopefully we will have enough margin for normal inflation rate even high. I consider inflation rate under 20% still normal? But if it will be like Argentina, I guess there is nothing I can do to protect myself. Wait, maybe I should be some gold bricks?
That’s fair although inflation does impact everyone – working and retired but I get your point that inflation is more of a factor when not working!
Stay tuned for my case study today!
Mark
Not sure interest rates either way are the cause/solution, massive increasing money supply would to me be the more likely culprit for the rising inflation rate. Curb the money supply and inflation rate will decrease. Though in the end energy is key to everything. With the age of resource scarcity being upon us, maybe this is what drives our elites to do such insane things as start wars. Or actively encourage conflict. (haven’t all wars been resource driven?)
David
That’s very fair David: “Curb the money supply and inflation rate will decrease.” I doubt this might happen though. Seems the printing money is the most common route.
Yes, extremely power hungry and/or resource drive for sure. Sad times really.
Hang in,
Mark
Very interesting post Mark! Thank you.
Two years of nothing but talks about Covid and then the sad war that’s happening in Ukraine and of course all the talks about inflations it seems like we don’t deserve a break.
As far as inflation Mark you’re 100% right on trimming some unncessary spending and subscriptions comes in first like having cable internet netflix etc…which it seems like a must have even though you barely get the time to use all of them but one subscription I’m enjoying is the Globe and mail 🙂 and I didn’t even know that you get a tax credit for the digital subscribtion, and I would also say a yearly vacation with the family it’s something that I hope to always have after all what’s the point of making money working and saving if you’re not going to treat yourself once a year.
Back to inflation i think if you’re investing in strong companies that is able to increase its earning and share that with their shareholders you’ll be fine and we’re blessed in Canada to have a bundle on them.
Thanks Gus. I like the Globe as well. Rob Carrick is kind enough to link to my site every few weeks and I also enjoy Heinzl’s Dividend Hog/Yield columns 🙂
Yes, trimming expenses where it makes sense in higher inflationary times is vital.
I hear ya on the vacations though – you have to live your life too!
My goal has always been a blend of income (today via dividends) and growth from companies and ETFs over time (for tomorrow). So far, so good and getting closer to our long-term goal that seems SOOO far away a decade ago!
https://www.myownadvisor.ca/dividends/
Onwards and upwards for us Gus!
Mark
For many, issues like inflation only become a concern, after the fact, otherwise they would not be spending more than they earn, or their debt would not be more than their earnings could handle.. The same will happen when the next bear market occurs, they’ll be scrambling to adjust their portfolio. I don’t worry about either.
Ya. I try not to worry about it cannew since I have some inflation fighting power built in. Since you’re a fan of your dividend payers, including your own portfolio, it would be interesting to see a post/your post on how your portfolio (via dividend raises) is built to offset inflation. I suspect your average dividend increases are in the range of 5% or so over the last decade which would offset for sure 🙂
Mark
Added a post on my site, thank for the suggestion.
Great stuff.
Mark