There are nearly an infinite number of ways you can be separated from your money. You can lose it investing, you can overspend and you can even run your pants through the wash with your wallet still in them. Fortunately, these are all avoidable situations but one loss of money people think they have zero control over relates to inflation. Chances are good you’ve been hearing a ton about inflation lately and you may be wondering how it will affect your wealth going forward. Well, for most people, rising inflation will absolutely slow down their path to financial success but, fortunately, you don’t have to be one of those people thanks to our old pal, Warren Buffett! As such, I want to share with you what Uncle Warren deems to be the most important factor in combating and overcoming inflation, so let’s dive right in!
There are certain things I don’t like to assume. For instance, I don’t like to assume people’s gender, nor do I like to assume that people find me attractive — which they probably do. Another thing I wouldn’t want to assume is that you are aware of what inflation truly is so let’s get that out of the way first before we move on to how Warren Buffett recommends we fight one of the biggest threats to our money!
Inflation is defined as a sustained increase in the price of goods and services which in turn reduces the purchasing power of the money you have. Examples of this are when you go to the store and milk and bread have now shot up in price or when you take your girl out for dinner and the prices make your eyes pop out of your head more than usual. In short, your money doesn’t go as far and that’s a big issue!
The question people often ask me, and one you may have yourself is, do prices really need to ever go up? I don’t know about you but I prefer to pay less when I go to the store or shop online and I’d be willing to guess that you feel the same. Well, inflation is a by-product of three financial phenomena with the first being demand-pull inflation.
Three Forms of Inflation
Demand-pull inflation takes place when more money becomes available, which we’ve seen recently through the printing of trillions of dollars in the United States in the form of stimulus checks and other governmental programs. In effect, people…