With trillions of dollars being created currently for stimulus programs, our money supply is clearly being increased and the inevitable side effect is inflation. When there’s more money out there in our economic system, our money simply has less buying power and that makes the cause of goods and services rise. Inflation is a heading tax on the American people because while our income might be increasing by 3% or 5% every year, our cost of goods and services that we buy could be increasing by much, much more.
The most powerful inflation fighting tool that I know of is an IRA or 401k, a tax differed investment vehicle. The reason that this is the most powerful tool that battle inflation or even profit from inflation and magnify your investment earnings through inflation is because number one, when you utilize an IRA or 401k, your contributions are tax deductible. Then your earnings are tax differed and only when you make distributions later on in life are you paying taxes. So, you’ll notice, you’re differing your taxes as much as possible and so you’re earning money with earlier more valuable dollars and you’re paying taxes with later less valuable dollars.
To learn about how to use an IRA or 401k to invest with unrestricted investment options, subscribe to this video channel or visit my blog at jeffnabers.com.