Cash is TRASH!
During a time of inflation anyway…
When I took my Accounting classes in college, a standard mantra was always “Cash in King”. Meaning as long as there was a good balance sheet showing a large cash balance, then things are good.
Well, times change
Cash is NOT King. CashFLOW is King!
Warren Buffet is still known as, and probably will forever be known as, the most successful investor of all time.
I grew up not far from his house in Omaha and have been to several Berkshire Hathaway shareholder meetings, mainly because they are actually fun to go to.
A recent article from Kiplinger talks about Warren and Berkshire making HUGE buys right now. And they say it is not because of the stocks being down, which right now was been the biggest Q1 drop since 2009. He did not buy much during the slump in 2020 either.
Why is he buying NOW?
One word…
At the time of this posting, early May 2022, inflation is rampant! We are told it is just under 9% but the commonly accepted number is more likely between 10-12%. And now the Fed is raising interest rates insanely fast to help combat it.
Warren knows that having cash sitting around, not invested, is losing value. Especially right now. And for him, Berkshire has BILLIONS sitting around.
It is painful to watch that value drop by 10% because of the loss of purchasing power caused by inflation.
Even 5% annual inflation destroys unbelievable amounts of purchasing power over a lifetime. So don’t hide your money under the mattress or in a safe, or even in a bank account. See chart.
Warren Buffet is buying.
And you should be too.
From the Kiplinger article,”When prices are rising at the fastest pace in four decades, cash is trash. That helps explain Buffett’s biggest Q1 binge…”
I am not advising to buy stocks, or even real estate. I am not a licensed financial advisor and I don’t know your personal financial situation or risk tolerance.
Though I very much am more favorable to Real Estate.
But you should have your money invested somewhere to earn above the level of inflation so that you at least stay ahead.
If it is in a savings account or CD, that only helps the bank, not you. The measly 1% or less they pay you in interest will not help you beat inflation.
Investing in cash flowing, appreciating assets will!
Such as Real Estate.
Want to learn how to not get beat by inflation? Send me a message and let’s talk!
When you buy appreciating assets, like Real Estate, on fixed low interest loans, the payments you are making to pay it down are actually less over time because of inflation working in your favor, while at the same time the value of the property goes up. Learn more about that from a previous post, How to Win Against Inflation.