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A Stealthy Threat
Written by Steve | Published: |
Growing up my brothers and I loved to watch movies about ninjas. After watching them we would roll around on the floor, try to kick or jab each other, and even make our own ninja stars.
In my adolescent mind I was convinced being a ninja was the path for me…
However, there was one problem: I was not ‘STEALTHY’ at all.
I would try to sneak up behind my brother and my ankle would pop, or I would cough, breathe too loudly or even one time had to sneeze.
Let’s just say the art of surprise was not with me.
Last week I was visiting with a client and we were discussing the impact of inflation on their retirement.
They couldn’t believe the demand it put on their assets and how it affected their free cash flow.
Another name for inflation is the “stealth tax”
By movements from the Fed and Treasury more dollars are injected into the economy literally eroding the purchasing power of your dollar.
This can be just as dangerous than losing money in the market and sometimes even worse because it sneaks up on us.
If you look at this picture of Anthony Hopkins house in Malibu it was feet away from washing off the cliff like the house next door.
Do you think this happened overnight?
Erosion is sneaky until one day…it’s too late.
Here are a couple of charts assuming a $100k per year lifestyle with just a 3% inflation rate. The first chart shows how much money you need to sustain the current lifestyle and the next chart shows it in a different way with the purchasing power of your dollars declining.