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Protect Your Wealth from the Ravages of Inflation: A Three-Step Method

Book Description

Protect Your Wealth from the Ravages of Inflation is for people who have financial assets to protect in an unpredictable, inflationary environment. Maybe you have tried traditional financial advice, financial planning, and passive investment management techniques and you're still losing ground. Maybe you're worried that by the time you need to use it, your retirement fund will be worth less than your total contributions. Maybe you believe that high inflation will significantly decrease your standard of living in the future. Maybe all of these issues apply to you. Don't despair; help is at hand.

Protect Your Wealth from the Ravages of Inflation is a concise, no-nonsense, straightforward guide that will help you to do three things:

  1. Ensure that your emergency fund will still have some purchasing power when you need it. Emergency funds sitting in checking accounts, or near-cash investments, will just be eaten away by inflation. There is a better way to give you access to the cash you need when you need it. This book shows you how.

  2. Insulate you from significant changes in the strength of your home currency. If all your income and expenses are in a single currency like the U.?Show More S. dollar, you run a significant risk that your home-country currency will lose value. Currency risk in your income-purchasing power and working capital is often overlooked until it's too late to do anything about it. This book deals with this issue and gives you easy-to-follow advice to protect the value of your money.

  3. Generate a better risk-adjusted return in your investment accounts. Buying a basket of stocks and mutual funds and then performing the traditional "annual rebalancing of a diversified portfolio" just doesn't generate the returns most people require from their investments. This book shows you simple, powerful, and sophisticated techniques you can use to manage your investment accounts more effectively—and without making it a full-time job.

Protect Your Wealth from the Ravages of Inflation can't guarantee that you will meet your financial goals, but it can guarantee that your odds of success will be significantly increased if you follow its advice. The book:

  • Explains why traditional investing methods virtually guarantee a negative rate of return in real terms.

  • Illustrates the pernicious effect of inflation on an average investor's portfolio—and why an inflationary period may be in the offing.

  • Provides a three-step process to withstand emergencies, protect your liquid assets, and produce a superior risk-adjusted return on a stock portfolio compared with conventional investing methods.

What you'll learn

  • How government policy normally leads to a debasement of the currency and subsequently an inflationary environment

  • How inflation significantly reduces your standard of living unless you can consistently increase your income or reduce your expense

  • How the current U.S. Consumer Price Index seriously underestimates true inflation

  • How to construct an inflation-proof emergency fund

  • How to mitigate home-currency risk

  • How to generate a better-than-average risk-adjusted return in investment accounts

  • How to do all this before it's too late

Who this book is for

The book is aimed at people who have reached a level of financial stability and whose income is greater than monthly expenses. They have emergency cash, day-to-day working capital, and investment accounts (including retirement accounts) to protect and grow in a potentially inflationary environment. Although U.S. residents will be the primary focus, all the methods and techniques presented should be relatively straightforward to adapt to any country with a fiat currency.

Table of Contents

  1. Title
  2. Dedication
  3. Contents
  4. About the Author
  5. Acknowledgments
  6. Acronyms, Abbreviations, and Symbols
  7. Introduction
    1. Protect
    2. Wealth
    3. Inflation
    4. In Summary
  8. Chapter 1: Financial Fitness: What Does It Mean to Be Financially Fit?
    1. Balance Sheet
    2. Mr. and Mrs. Unfit
    3. Miss Borderline
    4. Mr. and Mrs. Fit
    5. Cash Flow Statement
    6. Increasing Income: An Alternative View
    7. Reducing Expenses: An Alternative View
    8. In Summary
  9. Chapter 2: Inflation: What's the Problem?: If Your Finances Are Fit, Why Should You Worry?
    1. The Problem of Reduced Purchasing Power and Negative Real Interest Rates
    2. Why Inflation Is Inevitable
    3. Drilling Down on the CPI
    4. The Single-Currency “Problem”
    5. Who's in Charge, You or the Financial Industry?
    6. Mr. and Mrs. Fit Visit a Broker/Advisor
    7. In Summary
  10. Chapter 3: Step 1: Set Up an Emergency Fund: Protect the Purchasing Power of Your Emergency Cash
    1. Increase Your Emergency Fund by the Same Rate That Your Expenses Go Up
    2. The Simple Solution: Precious Metals
    3. An Inflation-Proof Emergency Fund That Maintains Purchasing Power
    4. How GoldMoney Works
    5. Mr. & Mrs. Fit Establish an Emergency Fund
    6. Gold vs. the Dollar
    7. An Alternative Solution, for People with Home Equity to Spare
    8. In Summary
  11. Chapter 4: Step 2: Make Savings and Working Capital Work for You: How to Maintain an Acceptable Real Rate of Return in Different Interest Rate Environments
    1. A Positive Real Interest Rate Environment: What to Do
    2. A Low or Negative Real Interest Rate Environment: What to Do
    3. Historical Results
    4. In Summary
  12. Chapter 5: Step 3: Generate a Good Risk-Adjusted Return on Investments: How to Successfully Manage Your Own Investment Accounts
    1. How to Measure Risk-Adjusted Return Effectively
    2. Let's Look at Return
    3. Let's Look at Risk
    4. Don't Even Think About Trying to Manage Your Retirement Account
    5. Mr. and Mrs. Fit Visit a Casino
    6. If You Do Want to Manage Your Own Investment Accounts, Don't Use FARCE
    7. “Trading” vs. “Investing”
    8. Market Selection
    9. Instrument Filter
    10. Setup Conditions
    11. Entry Signal
    12. Position Sizing
    13. Exit Strategy
    14. Putting It All Together
    15. A Simplified Trend-Capturing Method
    16. Market Selection
    17. Instrument Filter
    18. Setup Conditions
    19. Entry Signal
    20. Position Sizing
    21. Why Only 2% Risk per Trade?
    22. Exit Strategy
    23. Mr. and Mrs. Fit Become Part-Time Portfolio Managers
    24. In Summary
  13. Chapter 6: Taking Control: Procrastination Is a Leading Cause of Failure, So Take Action Now
    1. Achieve Financial Fitness
    2. Create an Emergency Fund
    3. Fund a Savings Account
    4. Manage Your Investment Accounts
    5. What Could Go Wrong?
    6. It's No Longer Legal for Citizens of Your Country to Own Precious Metals
    7. GoldMoney Or Your Metals Broker Goes Out of Business
    8. Some of the Major Currencies Become Defunct
    9. Some of the Precious Metals ETFs No Longer Exist or Have Very Low Volume
    10. Some of the ETFs in Your Investment Portfolio No Longer Exist or Have Very Low Volume
    11. Your Broker Goes Out of Business
    12. Financial Meltdown
    13. In Summary
  14. Appendix A: Recommended Reading
    1. Trading
    2. Money and Investing
    3. Miscellaneous
  15. Appendix B: Useful Resources
    1. Trading and Investments
    2. Precious Metals
    3. Brokers
    4. Economics and Statistics
    5. Currency Interest Rates and Consumer Price Indexes
    6. Products
    7. Index