If you live in the U.S. you know that inflation is higher than it has been in decades. If I am remembering right it is the highest it has been since the 70s. So, if you are not investing, everyday the money you do have is worth less and less. Inflation is destroying the value of your money. The only way to protect against this is by investing.

Now, what I mean by investing is not going to Wall Street Bets. I mean investing in an index fund or a mutual fund. I mean something that has relatively low risk and enough return to basically keep you from loosing money. There are not many places you can get 11% reliable return that would be needed to counteract the current inflation in the end of 2021, but a good mutual fund or index fund can get from 7% to 10% return. If your money is in a savings account you probably only see 2% to 4%. That money is just loosing value.

Now I am not going to talk about what I do for investing, that I will discuss in another post, but I do want to stress to be smart about how much you invest. Most people have probably heard the term “emergency fund”, and it is important to have that in an accessible account and not invested. Everything else should be invested in some manner. It is also good to keep your investments diverse. You should have some money in a retirement account and some in investment accounts that you have access too before you reach retirement age.

The biggest point is to have your money is some type of account that will help preserve the value of it. I expect that inflation will get worse before it gets better, so it is important to do this as soon as possible, but also go into it with the right attitude. Never invest money you might need in the next 5 to 10 years if possible. If there is a market crash you want to have enough money available so you don’t sell you stocks at rock bottom prices just so you can pay this months bills. Every crash we have ever seen has been followed by an eventual rebound that exceeds the value previous to the start of the crash.

Most recommend having 3 to 6 months worth of bills saved in a savings account and the rest should in in some form of investment account. So if you have money above a few months expenses in a savings account move it to investments before it looses any more value.

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