Talking about inflation (the silent killer) and its recent rise
November 8, 2021
Welcome to Wealth Enhancement & Preservation’s Market Minute, where we get to update you on everything that happened in the financial markets this week. I’m excited to tell you we had another phenomenal week in the markets – with all three indices up and extremely solid.
The DOW was up almost 1.5% and the NASDAQ was up a little bit over 3%, which was the big winner for the week. We’re excited to tell you that we're still very optimistic, and seeing positive signs for the markets over the next three to six months.
I do want to talk to you about something that is concerning for the future, which is a rise in inflation. I'm sure all of you see it and feel it, but I wanted to show you some real data. Here's inflation over the last 10 years:
As you can see, it's been in check in the 0% to 2% range. However, in the last couple of months, it rose all the way to 5.4%. This is extremely significant.
I want to talk to you about how that may impact the future, but first, how it's affecting our Social Security checks. You can see that this year and heading into next year, our Social Security is going up 5.9%; that's the largest increase over the last 40 years by a significant amount.
What that means is, right now, it's a higher paycheck if you're retired and collecting Social Security. However, this rise in inflation will likely mean a rise in interest rates in the future. This will probably be the next cause of a major downturn in the markets.
We're not seeing it yet, because there are positive signs for the next three to six months. Of course, Wealth E&P is watching this very carefully. What we are seeing is: the Fed is tapering its purchase of debt. Rates will probably stay low through that period, and we'll see very slight increases in interest rates over the next year or two. Once the tapering process has come to an end or near an end, I expect to see a pretty significant rise in rates, which will affect the real estate market, the stock market, and the entire economy.
We’ll be watching that and will make adjustments to your models as things change, but in the meantime, let's enjoy the ride. If you have any other questions for us, if you want a risk profile, or if you would like a retirement projection, please feel free to reach out or visit www.wealthep.com. Otherwise, stay tuned for our Market Minute next week!
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