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Everyone remembers how things were so cheap once upon a time. “I remember when ice cream only cost 15 cents a scoop.” How often have you heard that sort of comment? The surprising thing is that since inflation happens slowly, we don’t notice the effect until a large amount of time has passed.

One detail that most financial advisors fail to mention is that inflation will destroy your savings. Most financial advisors will tell you that if you can get 8% return on your savings, you can retire in 40 years. I wouldn’t really trust that they can help me get 8% per year return. But even if they could, it would not be enough to retire on.

Why? Because a scoop of ice cream will cost $1,000. Right now, many experts are predicting that we will go into a period of massive inflation. This is because America is printing more money than ever. The rate of inflation is directly related to the amount of money that we print. Therefore, inflation is likely to increase in the near future.

The need to print money is largely fueled by the massive budget deficit. America doesn’t have the money to pay, so it just prints more. The bigger the deficit, the more it prints. And, it looks like we’ll be printing at record rates for the next few years.

It’s important to be aware of inflation, because it directly affects our finances. In just a few years the cost of housing and gasoline doubled. The same thing will happen again. If we do not double our income in that time, we will become much poorer. And our savings will drop in value by half.

This is the eighth post in a series entitled Secrets the Financial Industry doesn’t Want you to Know.

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Investing, Money, US Economy financial advisors, financial planners, housing, inflation, Investing, prices, savings, stock market

Since we are not taught anything about financial success in school, it’s a natural inclination to try to find someone else to help us achieve it. Trying to take advice from the talking heads on TV or the millions of Internet blogs is also a challenge. There’s so much information, that it’s difficult to know where to look.

The answer that many people come up with is to trust a financial advisor. They think that he advisor will help guide them with their investments, and they would not be able to achieve financial success otherwise. After speaking with the financial advisor for a few hours and making their decisions, they go back to work and spend as little time and energy thinking about investing as possible. Dreams of financial success are thrown on the back burner. This system is known as the Ron Popeil approach to financial success. Read more…

Investing, Money, Success financial advisors, financial success, Investing, Money, mutual funds, Ron Popeil, set it and forget it

It’s no secret that we are in a serious financial crisis. Some of the largest companies in the country are facing bankruptcy. Foreclosures are at an all-time high. Layoffs are creating hardship for millions. Many people’s retirement accounts are down 50%. People are wondering how they’re going to survive.

Part of the reason that this financial crisis has been so damaging to millions of people is that they took bad financial advice. Most people who have a 401(k) or IRA account had no idea how to invest their life savings. So, they met with a financial advisor. This advisor may have been provided to them by their 401(k) company, or perhaps they found the advisor on their own.

Most financial advisors recommend putting your money in a combination of stock funds and bonds funds. The traditional idea is to put more money into stock funds when the client is younger. Unfortunately for the client, stock and bond mutual funds are the worst possible investment they can make. There are a few good reasons that these mutual funds are widely recommended and are the de facto investment vehicle for most Americans: Read more…

Investing, Money, US Economy 401k, financial advisors, financial crisis, Investing, ira, mutual funds, real estate, stocks

Do you enjoy watching CNN or the Nightly Business Report? Did you ever notice how difficult it is to understand what they are saying?

A friend of my mother’s commented to me last night, “How come I can never understand what those financial guys on TV are saying? It’s like they speak a foreign language.”

I said, “The problem is not that you don’t understand. Those experts are just using financial mumbo-jumbo to confuse people and make other people believe that they’re not smart enough to understand.”

Like most Americans, she trusted experts to manage her finances because she thought its too difficult.

Unfortunately, the result is that the financial advisor sold her a bunch of mutual funds! In our society, it’s very easy to rely on experts. Financial planners are experts. Doctors are experts. Teachers are supposed to be experts.

However, I don’t believe that most of these experts really serve their customers. Why? Because they are in business to make money. They get paid regardless of how much money you make or lose. They get paid regardless of whether you live or die.

So what’s the solution? None of these people are going to care about your finances as much as you do. So each American has to take responsibility for their finances. They may not need to choose their individual investments, but they do need to get educated and evaluate the results.

Investing, Money advisers, CNN, experts, finances, financial advisors, financial experts, nightly business report