Why Inflation is the Benchmark to Beat

I know inflation has been depressed recently. Still, inflation will return and will knock down the buying power of our cash over time. So why have I determined that inflation is the benchmark to beat? Lets say that your current annual expenses (bills, food, gas, etc) are $20,000. If inflation rises at an annual rate of 3%, your expenses will turn into $40,000 after 25 years of 3% inflation. Do you see how much inflation can cut on the purchasing power of the dollar? If you hid $10,000 under your mattress and went back after 10 years to get it, how much would it be worth? Given an annual 3% rate of inflation, that $10,000 has become about $7,500. Over time, to keep your money at the same purchasing power, you have to beat inflation.

Currently, inflation is beating stocks, bonds, and most everything in between. So how do you keep up with inflation? By buying hard assets. Hard assets are things like buildings and commodities. I would suggest exploring the realm of commodities and investing in metals. This will not only, theoretically, appreciate over time to match inflation, it will also hedge against any dollar declines. The best way to get into precious metals is to buy an ETF or another fund that invests solely in metals. These prices rise and fall over time, but this is where you want to go for safety from the market.

For the common man, the hard asset of choice is the cow. Think about it. A cow has everything you need: milk and meat. I like to eat cereal...a lot of cereal. So what can I do with my new cow? Take the bowl outside, give that utter a squeeze, and BAM! I now have fresh milk for my fresh cereal. Now you have saved money on buying milk, saved money on the gas to get milk, and saved the opportunity costs to get that milk. I have seen a lot of dogs hobbling around on three legs. Why can't a cow do the same? You want some meat? Take a leg! Now you have all the necessities. By purchasing a cow, you have not lost any money like you would have over the last 6 months. You have actually saved money by having your own milk, meat, and company that doesn't have a whole lot to say.