Enemy Of Your Money #3 - Inflation

Paul K. Dunn
Jun 15, 2017
3 min read

Inflation - The Moving Cost of Living

inflation by economic definition, is a general increase in prices and fall in the purchasing value of money. This means the value of money is getting weaker as prices increase. At some point it has to reach ZERO or move down. That's why I consider it to be the moving cost rather than rising or declining. We simply can't be sure what the government will decide if the dollar gets too low. It has the potential to go either way, but lately its only been rising. To make things worse, the rise in costs of goods and services are not matching the employment wages. In some states, the financial equality gap is massive between rich and middle class. Those who are savvy with money have a different experience of crashing markets than the majority. If you understand currency as defined above, you will understand that your money can NEVER be still. I will paint a picture of a river. If the current is steady, the river lives, flows and is vibrant with life. If it becomes still, it drys and kills everything around it, if it doesn't return to its moving state. Our money has to be the same way. Always in a moving state. This is why majority of America is struggling. Their money is constantly moving away from them. Its in a never ending decline from the moment they receive their pay check. The solution to defeating inflation is changing the direction of your currency to UP! If you use the solution for Bad Spending Habits which was consuming cash flow assets thats a great step forward. If you then put that money to work using COMPOUND interest, now you have a real money machine. Compound interest by definition is interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan.

Let's look at an example. If an amount of $5,000 is deposited into a savings account at an annual interest rate of 5%, compounded monthly, the value of the investment after 10 years is $8,235.05. If we take the same investment but use the simple interest given to you by the banks these days you'd have is $7,500. A loss of $735.

Let's put these numbers to work over a longer period of time and then let's reverse the effect to show the power of compound interest. A set of 35 year old twin brothers want to retire at 65 with a $1,000,000 nest egg. Twin 1 has no idea about money and gets advice to grow his money, using compound interest of 5%. Twin 2 knows that compound interest is the key to retiring young and rich so he secures 12% interest. After the accounts are set up the twins met up to discuss what the numbers. Twin 1 would have to put in $231,377.45 to achieve his goal. Twin 2 laughed and says his number is $33,377.92 to hit the same goal. That would be a difference of nearly $198,000 to get the same result. Twin 1 would have to produce almost 6 x's more $$$ than Twin 2. That's definitely working harder not smarter. Can you see the power of understanding compound interest? Simply put, compound interest is your money tree. It breeds money. The higher the interest rate, the faster your money doubles itself. This is the BANK'S secret to their success. They give you access to low % simple interest deals and they charge you high % compound interest on credit cards and loans they give out to you. Stop letting your bank get all the money to themselves and learn how to shift compound interest in your favor.