“They” Are Destroying The Dollar — But There Is Something You Can Do
Decades ago, wealth was accessible for everyday people. But according to Jaspreet Singh, an avid investor and the Chief Executive Money Nerd at Minority Mindset, money is more complicated now.
In Jaspreet’s experience, the problem is that young people are following advice for a system that doesn’t exist anymore. Money, the financial system, and the economy have changed so much that you definitely can’t save yourself to wealth.
In fact, savings will only make you poorer. Inflation eroded the value of the dollar, which means it’s much more difficult to build wealth today than it was back in 1971.
It sounds like bad news, but you don’t have to sit down and take it. Learn why the almighty dollar is losing value — and Jaspreet’s strategy for beating inflation.
Why is the dollar losing value?
The American dollar has lost more than 90% of its buying power since 1913 — $1 in today’s money is equivalent to 4 cents in 1913. But this decrease didn’t happen over time; it’s largely a recent phenomenon. $1 today is the same as 15 cents in 1971, which means the dollar lost more than 80% of its value since 1971.
So what’s going on?
Jaspreet says that the dollar rapidly declined in value when Nixon took us off the gold standard in 1971. In the decades since, we’ve seen high inflation rates that make savers losers, especially in an environment with low interest rates.
Today, the government can print money on demand. That might sound like a good thing at first, but it’s created an unstable economy with a lot of volatility — much more volatility than we’ve seen in the past. Downs and ups happen, but in today’s market, the level of volatility is a big cause for concern.
Saving versus investing
When you hear the economy isn’t doing well, your first instinct might be to save what you have. Jaspreet thought the same thing growing up: his immigrant family drilled the savings mentality into his brain, telling him to save his way to wealth.
But Jaspreet quickly realized that he couldn’t save his way to riches in today’s environment. If he put $1,000 in the bank, in one year, he would have that same $1,000. The problem is that, when you account for inflation and rising prices, Jaspreet actually lost money by putting this money into a savings account.
Sure, your money is relatively safe thanks to FDIC insurance, but savings is still risky because that money doesn’t grow on its own.
The biggest lie you can tell yourself is that you can save yourself to wealth. In today’s environment, savings are guaranteed to lose value. While the cost of everything increases, your cash is sitting there, losing value.
What you can do to fight inflation
So, what can you actually do about the shrinking dollar? The dollar is diluting in value but the prices of assets continue to increase.
Jaspreet says that the best thing you can do to fight inflation is to start investing, whatever that looks like for your situation. You need to put your cash somewhere that will allow it to grow in spite of inflation.
And you don’t need to be Warren Buffett, either. Jaspreet says investing is for everyone: here are his 3 favorite ways to grow wealth.
1 — Real estate
People shy away from real estate investments because they sound complicated and expensive.
And who could forget the real estate crash of 2008? What if the market crashes again?
Instead of limiting yourself with the what-ifs, Jaspreet says mindset is a big part of real estate investing. If you want to do something, make a plan to do it. There are so many ways to invest in real estate without a ton of cash, whether that’s in the form of:
- Buying a duplex where you live in one half of the building and rent out the other half.
- You buy a home for yourself, live there for 2 years, and rent it out to pay off the mortgage.
- You buy a home for yourself and rent out a room to start.
Cash flow definitely gives you more options in real estate, but you don’t have to be a millionaire to invest in real estate. Start small, learn, and continue growing your money from there.
2 — Stocks
The key to investing in the stock market is consistency. Instead of frantically selling your shares when the market is down, keep a cool head. Treat downturns as an opportunity to buy shares on firesale to grow your wealth in the long run.
Instead of buying stocks a few times a year, Jaspreet makes it a point to invest weekly. He recommends exchange-traded funds (ETFs) for investing newbies. There’s no need to find the perfect company for your investment, either. An ETF is like investing in a basket of stocks that expose you to the entire stock market. It eliminates a lot of decision fatigue, which is nice.
P.S. Stocks got you turned around? Jaspreet made this free guide all about investing in the stock market if you need a little help.
3 — Businesses
Did you know that you can invest in small, private companies that aren’t on the stock market? Jaspreet loves looking for growth-stage startups that need investors.
You won’t see returns quickly this way, but it’s the best way to get in with influential companies before they’re big. Just remember to do your due diligence. Research individual companies and make sure they have enough promise that you’ll see a return on your investment.
Outpace inflation with investments
The dollar is only going to continue losing its value. But it doesn’t have to be doom and gloom for your financial future: follow Jaspreet’s blueprint to use your money as a tool.
When you own assets that appreciate in value over time, you can inflation-proof your finances to enjoy more stability over time. The key here is to educate yourself. Learn how to invest your money, how the stock market works, and what it takes for you to start investing.
Not sure where to start? Check out Jaspreet’s YouTube channel for simple, no-nonsense investing strategies to invest as little as $100.