Fall 2021 Newsletter

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It is always better to own a home than to rent a home. Housing is a MARKET and it can drop. Renting can be better than home ownership in planning for life’s circumstances, such as church missions and relocation for work. Buying can certainly produce better results over the long-term, but too often people impulse-buy when renting would be cheaper, easier, and better suited for their needs and lifestyles. My taxes are going to increase in retirement. Taxes always increase by the time I get to retirement. Tax costs go down at retirement for nearly all our clients. Payroll tax ceases and tax brackets reduce. “Safe Money” salespeople love to perpetuate this myth, as it serves their purpose to market high commision life insurance and annuity investments. If somebody says they are a fiduciary, then you can automatically trust them and their recommendations. Wrong! Being a licensed “Investment Advisor Representative” or a firm that is a “Registered Investment Advisor” requires these individuals or firms to act in a client’s best interest. However, you should be aware that the regulations still allow for those same advisors to market and sell commission-based products, including expensive and illiquid annuity policies, life insurance policies, non-tradable REITS, and other high commission products. Gold is an answer to inflation. The 40-year average return of gold is 2%. The 30-year average return of gold is 2.5%. The 41-year average annualized inflation rate is 3.5% (1979-2020). So, if gold has had an average rate of return that is far less than the inflation rate, then how can it possibly be a safeguard against inflation? The answer, of course, is that it is a terrible investment if your concern is inflation. As a reminder, give us a call or go to www.strategicutah.com to take advantage of our Second Opinion Service (SOS). Source:https://www.worlddata.info/america/usa/inflation-rates.php#:~:text=The%20inflation%20rate%20for%20consumer,rate%20wa s%203.5%25%20per%20year STRATEGIC PLANNING GROUP 6
Take Inflation Seriously By John Park From investments to complicated retirement strategies, John works to educate and advice his clients on making smart financial decisions. T. he past 18 months have given us a mixed bag of economic data and indications. We have been experiencing a unique situation in our economy. We have faced shutdowns, capacity limitations, social distancing, supply chain shortages, certain price increases, and certain price decreases. How can we analyze the economy in such an abnormal environment that has few or no comparisons? Well, we can go back to basics and analyze fundamental indicators. For the sake of time and your sanity, I am not going to cover a ton of different in-depth economic figures. We are primarily concerned with evaluating inflation and its implications. It is easy to look around and declare that inflation is a problem because of the increased cost of vehicles and other durable goods (appliances, furniture, computers, etc). It is equally easy to say inflation will be short-lived because it is a direct result of a temporary shutdown and a restricted economy that has since re-opened. What are the numbers telling us? How bad is inflation? Is it here to stay? Many have claimed success over August’s inflation measurement of .3% when .4% was expected. They also ignore the fact that the Consumer Price Index, a primary inflation indicator, is up 5.4% over the preceding 12 months. I do not need to spend much time convincing you that inflation is an issue right now. You can see it at the gas pump, grocery store, car lot, and more. Will it be short-lived? I do not think so. I am going to put myself out there a little and say I expect inflation to be a major concern through 2022. There are a couple of factors contributing to inflation. First, we have a supply chain shortage due to resources and labor limitations. For example, you have probably heard about the chip shortage in the automotive industry. Cars are back in demand post-shutdown, manufacturers cannot make enough to satiate demand, so up goes the prices. We also have a problem with our labor supply. Despite many businesses trying to hire staff, jobs are not getting filled. The unemployment rate at the end of 2019 was 3.5%. It currently sits at 5.2%. That is a 48.57% increase. Yikes! Higher unemployment will slow down our Gross Domestic Product (GDP). If demand for goods and services remains high and the supply cannot be delivered , inflation could remain a problem for quite a while. What are the numbers telling us? How bad is inflation? Is it here to stay? Another inflation factor is at play. The M2, or money supply measurement, is very high compared to pre-COVID 19 levels. This is a measurement of the money available to the economy across financial assets like cash, bank deposits, investments, and other assets that can be quickly converted and liquidated. The M2 measurement is 32% higher than it was pre-COVID 19. This means there is a lot of cash on the sidelines which can be spent on goods and services. Also, if interest rates are low, it is easier for people to borrow so they can spend, which also increases the money supply and drives up prices. STRATEGIC PLANNING GROUP 5
Page 2 and 3: C O N T E N T S Ryan Craner shares
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Page 14 and 15: MEET THE TEAM The people of Strateg
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Fall 2021 Newsletter

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