There is the inflation that everyone talks about on TV and in financial reports: CPI, Core CPI, Producer Price Index…blah blah blah. These reports are important, but I don’t think they are as important to you, the investor, as you may think. Especially if you are a high-net-worth investor.
Why? Because of what those indices measure. The CPI, for example, measures the price change of over 80,000 goods and services that are purchased by consumers across 180 different categories.
The CPI is okay to use as a gauge if you are buying 80,000 things. But for YOU, inflation tends to be camouflaged and in fact, downright insidious. That’s because your real inflation depends on what you buy…it depends on how much different your consumption basket is relative to the 80,000.
The inflation of your consumption basket is probably much higher than what these headline numbers are printing. I’ve seen studies that suggest it may be as much as another 1.5% on top of the CPI.
Have you paid attention to the increasing cost of the luxury goods you buy? Luxury cars, shoes, clothes, and handbags? Those are things that high-net-worth people buy–and keep buying–in retirement.
Yeah, people say they will downgrade their lifestyle when they retire, but I have yet to see anyone downgrade from their Range Rover to a Honda just because they retired…They tend to buy a new Range Rover when replacement is warranted.
Be aware of this when doing your planning. At Monument, we use a much higher number for inflation than the current CPI because we know that the goods and services high-net-worth investors are buying are the ones that have been going up in price.
Call us for help if you need it. On paper, we’re a wealth management firm. In reality, we’re equal parts creative lab, brain trust, and outspoken critics of the financial industry. What we really are is… A team of razor-sharp, innovative, collaborative, and creative thinkers with seasoned financial expertise, a renegade spirit, and zero commitment issues.
If you are doubting your current plan, portfolio or the advice you are getting, see if you’re a good fit for Monument.
Topic Change #1
Please be sure to see last week’s “We’ve Stopped Trying” blog post. It’s been one of the most read blog posts from the past 12 months and has received the most comments (emails and phone calls) of all the posts I can remember. Thanks for all the positive thoughts and comments – they really mean a lot.
Topic Change #2
It’s intern season, and we are ready to start selecting our next crew. I love our intern program—and I mean this in the best way possible—It’s because I HAVE NOTHING TO DO WITH IT. In case you missed Dean’s blog post last week highlighting the talented women at Monument, this program is 100% managed by Brittany Dewberry, our Director of Brand and Marketing. If you or someone you know is looking to intern in video, design or copywriting for the summer or a semester, be sure to check out this video below and email Brittany. (Our Financial Planning Internship for this summer is already filled.) This video makes me proud because it not only reminds me of how great those recent interns were (and are) but also how we help foster talent…Oh, and the best best part? Well, it’s that Brittany shows me this completed video and says, “What do you think?” Well, watch it yourself and guess what I ended up thinking. And yeah, I had NOTHING to do with it. I was just presented the final project…all done by them.
That’s how great our Team is, and it’s mostly women. I’m proud of that.
Keep looking forward,
On another note, we remain at MONCON 5. We see no data on the horizon that has increased the probability of a recession anytime soon. When that changes, because one day it will, we will have an immediate blog announcement. But for now, it’s MONCON 5 and chill. See more of an explanation by reading this blog post, “How to Forecast and Manage a Recession.”
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