Investment Insights

Food for Thought

May 31, 2024

Did you ever stop to think “What is money?” Most of us would simply say: “It’s what we use to buy and sell things”, and that would be true. Money is, at its core, a Medium of Exchange.

Money is an easy vehicle for us to transact with each other for goods and services. But, what else is it? Well, it’s also a Unit of Account. We don’t blindly empty our pockets of cash at each transaction, we count out the equivalent value to be exchanged. We expect that same unit to be deducted from our checking accounts if we use a debit card or added to our outstanding balance if we use a credit card. We measure our material wealth by it. This “dry” accounting aspect of money may seem obvious, but I think it is often overlooked. Lastly, and maybe more explicitly over the last couple of years, is that money is a Store of Value. When we obtain a dollar, we’d like to know that it will purchase the same value of goods tomorrow that it does today. For most of our lives, the US dollar has annually lost some small amount of purchasing power due to inflation. With mostly modest upticks since the 1980s, although we were aware of inflation, it did not significantly impact our lives. The unfortunate truths are that Inflation compounds over time and that, since 2021, inflation has moved up in such a way that for most of us it is significant, burdensome, and unignorable. In this way, at this time, our money is failing us in its intended purpose (not to be confused with our money has failed or a currency collapse).

Our years of experience has taught us one thing when it comes to money: to live comfortably, maintain our standard of living, and enjoy what’s ahead in life, we need to make investing a priority. History teaches us that we can rarely grow our wealth in any meaningful way without investing and we cannot invest if we do not save. The way that our financial system is structured, we strongly believe that individuals should not attempt to hide from inflation, but instead BUY inflation through investments in assets that benefit from its existence.