Inflation Edition: Simple Saving & Investing Strategy
Feb 24, 2022
Heyyy!
So it’s 2022 and inflation has reached 7.5% which means $100 is worth $93.50.
(visual representation of the dollar)
I don’t know about you, but for most, it would take years to save up to $96,000. Here’s a quick equation: $4000*.15= a $600 saving budget. Then $96,000 savings goal/$600= 160 months (13.3 years) to save
But let’s just say you have been saving for the last 13 years and have $96,000 sitting in the bank, this year that would be worth about $88,800 in buying power.
So what would I recommend?
Find the comfortable emergency number that you would like to have access to. For me, that’s $5,000 to $10,000 in the bank. Realistically, emergencies shouldn’t be popping up like that.
Then I would take the rest of the savings budget and invest for long-term savings so that way majority of your money is outpacing inflation.
Let’s continue with the $600 savings budget that we are going to use for long-term savings growth in the stock market.
You could put $600 a month into index funds in a brokerage account (separate purpose from your retirement and other investment goals/activities) with an average ROI (return on investment) of 10% and in 9 years you COULD have about $107,549.46 saved/invested. what makes this better is to have about $108,000 invested- you would actually only invest $64,800 and you would save 4 years on saving.
Compounding interest is going to be your most powerful tool using this strategy.
A very popular index fund to invest in is the S&P 500. It has had an average annualized ROI of 10.5% since its 1957 inception.
A few Exchange-traded funds (ETFs) that track the S&P 500 are the QQQ, VOO, IVV
Disclaimer: This is for educational purposes only and should not be taken as advice. It is always recommended that you perform your own research. Also, the growth mentioned in this strategy are hard numbers and don't account for market volatility
What do you think about this strategy? Text me your response!
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