Live Big® Digest – Economic Vomitility Edition

In case you missed our live webinar presentation on September 21 — “Economic Vomitility and Financial Planning Dramamine” — it is now available on our website, so you can now watch the presentation whenever it’s convenient for you.

One of the points that we made in the webinar that bears repeating relates to the dangers of inflation.  As we put it in the New York Times last week:

“What changes, and very redically, is risk perception,” said Dave Yeske, a financial planner in San Franciso. “The scariness of short-term volatility disproportionately blinds us to the long-term scariness of inflation.” he added, saying that the recent inflation rate of 3.6% would erode your purchasing power by half in 20 years.  (“Long Term Stock Plans Help to Avoid Impulsive Moves,” New York Times, September 15, 2011)

The point is well illustrated by the chart below, which shows the impact of inflation over the past 30 years, from August 1981 to August 2011.  As you can see, inflation eroded away fully 60% of purchasing power over that time.  Someone who retired at the beginning of that period on a fixed income, would now be trying to live on 40% of his original spending.

The Corrosive Effect of Inflation

On a happier note, we’d like to remind you that we’ll be holding an open house in our San Francisco office on Wednesday, October 12 from 4:00 PM to 6:00 PM.  The staff from both offices will be in attendance, so please drop by for drinks and snacks and good conversation.

Have a great weekend!

The Yeske Buie Team