Inflation: What to do?

Know anyone who stayed 100% in cash?

"For the individual, staying in cash has proven to be painful even if he is spared market volatility. Thanks to inflation, $1 million in 2008 would have shrunk to $854,000 in 2013." Patrick Brenner, Schroder.

Staying 100% in cash today is still a bad idea. Inflation is not going to let up and this is something I blog about quite a bit. See: Inflation is not going away.

If you are a squirrel and save a lot, good for you but don't stop there. See: Double whammy.

So, what do we have to do to protect our wealth from being eroded by inflation? Quite simply, invest for returns higher than the inflation rate.

Don't dump money into bonds. See: Beating the Street with value deals.

Don't dump money into fancy (and misleading) products. See: Inflation adjusted retirement income plan.

Saving money is crucial, of course, but a necessary second step is investing and these might provide food for thought:

1. Grow your wealth and beat inflation.
2. Motivations and methods in investing.
3. Warren Buffett, the greatest money maker.

Get on top of your finances.

When we say we want to get on top of things, it means that we want to be in a position of control.

So, when I say I am on top of my finances, it means that I don't have a financial burden on my shoulders and I don't owe anyone any money. I am not chained down by anyone over finances.

So, I couldn't help but frown when I saw this:

What kind of brochure is this?
See top left corner for a clue.

Well, if we are borrowing for an investment that will generate a higher return (ROI) than the cost of debt, I guess it might be a good idea to borrow. However, look at the effective interest rates per annum:

15.44% for 12 months
13.44% for 24 months
16.11% for 36 months

How confident are we of getting a ROI higher than these interest rates?

Of course, if we are borrowing to fund consumption, heavens forbid!

If we need to borrow to fund our lifestyle, obviously, we cannot afford our lifestyle.

How to get on top of our finances? For a start, don't get into debt!

Related post:
The secret to avoiding financial ruin.