With recent political and economic events in Europe (especially Greece), many investors in the United States and around the world are reassessing their own wealth protection strategies. Many investors have spent years and even decades trying to accumulate sufficient means to support themselves in retirement, or to benefit their families and charitable causes. In response to the confusion and heightened risk in the market, it is natural to want to ensure that wealth is preserved, sustained, and continues to grow in the coming years.
Wealth vs Currency
One of the things to keep in mind is that wealth and currency are not synonymous. Far too often these words are used interchangeably, but they embody two vastly different concepts. Wealth is an accumulation of capital – tangible materials, business operations, developed skill sets, and specialized knowledge. Wealth encompasses the “raw materials” that allow you to create goods and services, which can then be exchanged for other goods and services.
Currency, on the other hand, is simply a means to facilitate the trading of your wealth for the wealth of another. Money, in and of itself, has very little value apart from facilitating transactions. In fact, it can be argued that currency has negative value as a store of wealth because of inflation.
Historically, inflation decreases the value of a dollar by 3% per year, though that rate greatly fluctuates from year to year. The Bureau of Labor Statistics estimates that the dollar lost 1.6% of its value in 2014. There is some debate today on the accuracy of these government figures; given that some organizations calculate inflation to be notably higher.
Inflation is one of the greatest wealth-eroding processes ever encountered. Using the calculator provided by the Bureau of Labor and Statistics, the dollar earned in the year 2000 has lost 27.6% of its purchasing power in the 15 years since! Clearly holding wealth as dollars in a bank account or under a mattress for several decades is not a prudent strategy for retaining value.
There are many schools of thought about where to store assets. You may have considered Gold or Silver. Or perhaps Real Estate? Here at Safe Money Investors Alliance, we highly recommend speaking with a Licensed Financial strategist about your particular situation before implementing any changes. If you would like to speak to me, Dr Jovan Walker or one of the specialist at Strongbrook REIC please contact my office to schedule a brief consultation (301) 577-6340 or email email@example.com.
Stay Tuned for a continuation of this article on Priorities of Wealth.
*Article written by my partner Strongbrook REIC