Keep Your Lifestyle as Prices Rise: A Simple Investing Plan
How much will you spend in the future?
This is an important question. We can estimate future spending by looking at your current expenses. Yet, the biggest factor is inflation.
Understanding Inflation
What costs you $1 today could easily cost $2, or more, in the future, especially with ongoing price increases across housing, travel, and everyday spending. You need to consider this when planning for
retirement, which could last that long or even longer.
To cover these costs, your assets must grow at least at the rate of inflation. You have two options:
- Ensure your assets grow with inflation.
- Accumulate greater assets and plan to spend them down during retirement.
This is why many retirement investment plans include a large portion of stocks.
Why Invest in Stocks?
For high-earning professionals juggling stock options and family expenses, keeping your investments growing faster than inflation is key to maintaining lifestyle freedom.
Stocks represent ownership in companies. These companies need to earn more than inflation to cover their rising costs. Owning a diverse portfolio of companies can help you earn more than inflation over time.
Building Confidence for the Future
Investing your assets in options that grow faster than inflation helps ensure you can cover future expenses with what you have now.
Ask yourself:
- Do you have a portfolio that accounts for the rising cost of living?
- How confident are you that you will maintain your current standard of living in the future?
- Does your financial plan support your goals?