How much did you pay at the gas pump the last time you filled up your vehicle? That whopping cost is a sure sign of how much inflation is impacting our lives. Vincent Chan, entrepreneur and YouTube creator – with over 350K+ followers – tells us that at the end of 2021 the inflation rate was around 7%. That’s the highest inflation number since 1982. Are these indicators a sign that hyperinflation is coming? In this article Vincent will share what this means for the economy and how investors can offset inflation.
Investors are eagerly awaiting the imminent announcement on interest rate hikes that are about to be shared by Jerome Powell, chair of the Federal Reserve. Vincent explores if this announcement will be sufficient to offset rising inflation and stop it from becoming hyperinflation. He states that it takes around 18 months for the effects of government policy changes to make an impact on the economy.
Vincent mentions that a small amount of inflation is actually good for the economy, with 2% being considered by economists as an ideal rate. The current inflation rate is 7%, over 3 times the ideal rate. To show this impact Vincent shares this example – If a consumer had $10,000 in cash it’s actual purchasing value at 2% inflation would be $9,800, at today’s 7% inflation rate that same $10,000 is only worth $9,300. The buying power is less, with costs of goods skyrocketing.
Hyperinflation can easily get out of control, Vincent states, citing Venezuela as an example, where the Inflationary rate for goods and services skyrocketed by a whopping 65,000% from 2016 to 2018. Consumer prices were doubling every 26 days.
Vincent shares these startling statistics – 80% of all U.S. dollars in existence were printed in the last 22 months. Going up from $4 trillion printed in January 2020 to $20 trillion printed in October 2021. Combine this with the supply chain issues and it’s a perfect storm for drastic inflation.
Here are 3 strategies from Vincent to beat inflation:
Strategy 1: Leave as little money as possible in bank accounts. Invest in the stock market. The S&P 500, known as a safe index fund, has averaged 10% returns since 1926 and had 26.9% return in 2021.
Strategy 2: Diversify your investment portfolio. Vincent suggests looking at cryptocurrencies such as Bitcoin and Ethereum. Many crypto enthusiasts claim that this is a good hedge against inflation as it has a limited supply so it can’t be devalued. However, he notes that cryptocurrency has never been truly tested yet during a high inflation period so he cautions newer investors.
Strategy 3: Borrow Money and lots of it. Purchasing rental properties is Vincent’s favorite strategy for beating inflation. Long term fixed income debt and the cash flow asset from rental properties make a lot of sense to him.
For more information on this topic, you can view Vincent’s YouTube video below:
This information provided by Vincent Chan is for educational purposes only, he is not a financial advisor and he encourages all investors to complete their own due diligence before making any financial investment.To learn more from Vincent Chan you can connect with him here: Vincent Chan