What is the "Silent Risk" for Money?

“Because I said so…” 

As a kid, that was a frustrating response to asking - “WHY” 

Its common that we want to understand the purpose of doing something.   

If your client is looking to lose weight, they might follow your recommendations more effectively when you explain why protein meals help them build/maintain muscle...compared to the trainer that just says "eat more chicken and less pizza".  

The same rules apply with investing.  

I could tell a client: "Save $3,000/month into this account..."

However, the “why” is the important part.  

Why not just put it in the bank? 

Why do we invest? 

ONE MAIN REASON IS: INFLATION. 

 

It's a “silent risk" that people tend to overlook.  

WHAT IS INFLATION: 

The general increase of prices over time.  

So why does that matter?  

Your purchasing power is decreasing over time.  

EXAMPLE: 

$100 in 1990, would only be worth approximately $51 today in 2020. 

So, if someone saved $1,000,000 for retirement 30 years ago…if they went to spend it today, it would only have the buying power of approximately $510,000.  

CONCLUSION: 

Investing can feel overwhelming, and saving money into a bank account can seem easier.  However, everything with money has its own set of risks to understand.   

A risk that is often overlooked is Inflation and the gradual reduction in purchasing power over time.   

If you would like help with your financial questions, please hop on a 15-minute call so I can discuss how to help you reach your goals.    

Best 
Pat 

Disclaimer:  This is meant to be educational only.  This is NOT advice or recommendations for your specific situation.  All investments carry risk, and you should understands all risks before making an investment.  Please speak with a qualified financial professional before making or changing any aspects of your finances.