Description

Let’s go back to macroeconomics class!   In this episode of Financial Clarity for Doctors, hosts Rachelle Vanderzanden and Corey Janoff discuss the basics of inflation.  Why do prices continue increasing?  We’d rather pay 25 cents for milk too!  Unfortunately, capitalism and supply and demand make price stability pretty much impossible.  And that’s not always a bad thing. 

Some Basics on Inflation: 

• Generally measured in the United States by something called the Consumer Price Index (CPI) which tracks the costs of goods and services. 

• Sky-rocketed coming out of covid times with supply chain issues, cheap money (low interest rates), a tight labor market which generally means higher pay, and stimulus funds. 

• Lots of demand because people had money, but supply was low, so prices went up. 

• Now hovering around 3%, but still dealing with the effects of large increases over the past few years. 

• Wages generally increase over time, which is another upward pressure on price through supply and demand. 

• The Federal Reserve has a dual mandate to keep inflation in check and keep unemployment low. 

• That does NOT mean zero inflation.  They have a target inflation rate of 2%. 

• One of the biggest ways they do this is by increasing interest rates, therefore making it harder for people to purchase things they would need to finance. 

• To protect against inflation: 

• Keep short-term savings in something like a high-interest savings account where you can earn interest. 

• Negotiate pay increases based on your cost of living. 

• Retirement money should be invested so that it has a chance to grow and outpace inflation – although we know this is not a guarantee, inflation is the bigger risk to long-term money. 

Inflation is a part of the global economy!  We can’t get rid of it, so the best we can do is protect our personal finances as best we can from its effects.  Listen to the full episode to hear more. 

For more financial planning tips from Corey and Rachelle, you can reach out to them at podcast@thefinitygroup.com. They would love to hear your questions and ideas for upcoming episodes. 
 

Discussions in this show should not be construed as specific recommendations or investment advice. Always consult with your investment professional before making important investment decisions. Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Adviser. Finity Group, LLC and Cambridge are not affiliated. Cambridge does not offer tax or legal advice.