Most of us have heard the phrase “money now is better than money later”.  This phrase refers to the Time Value of Money, which simply stated is the value of money with relation to time and impacted by inflation or deflation (aka return percentages).

The sad reality is since 1940, the dollar sitting in your pocket has been rusting.  Its value is constantly being corroded.  Assuming an average inflation rate of 3% per year, the $100 bill you have in your wallet  that you’re saving for a rainy day- one month later is only worth about $99.75.  Wait a year and it’s now about $97.08.   So now that you know the value is eroding before your eyes, we need to hurry and spend it as fast as possible- let someone else start eating the loss, right? 

Probably No- I’ll explain.  No for all of those that think they should hurry and buy that new gizmo or gadget, or vacation, or human sized stuffed bunny at Costco.  Trading a depreciating dollar for a more aggressively depreciating asset is like offering to trade an old rusty metal bucket for a brand new paper bag.  The rusty bucket was corroding, but it will still far outlive the paper bag. 

The new coat of rust proof paint lies in investing.  If you said you would invest the $100, you win.  The dollar will continue to go down in value and frankly, we want it to.  If it stops depreciating, it’s an indicator that our economy as a whole is losing value.  Usually our hourly wage is an indication of how the economy is doing.  The last time we saw long term depreciation was during the Great Depression.

For those of you that have enough money in the bank to live off of for another 25-30 years, you simply need to find an investment that matches the rate of inflation.  If that’s not your position, you’re going to have to beat inflation and the older you are, the more aggressively you’re going to have to beat it.  If you’re around age 40 or younger and still believe you’re going to be able to use Social Security to offset your meager savings, I want you to go to the nearest mirror and laugh at the silly person you see.   The working population is declining, but the load on Social security is increasing significantly over then next 10 years.  They’re already capping the increases on Social Security, which is usually less than the rate of inflation.  This means that while it will still likely exist, the comparative value is going down each year and will have to in order for the country to avoid bankruptcy.  The alternative is to raise taxes, but as previously discussed in a prior blog, that reduces GDP, only making the problem worse.  In other words, if the next 25 years go like the last 25 years, we could be looking that $1200/month Social Security Check, being worth the equivalent of a $700 check in today’s money.  Can you live off of that?   With how gas prices have been going, that should be enough to fill your tank a few times a month, plus a happy meal or two for your grandkids.  Sounds exotic doesn’t it?   While those are rough numbers, the point is that if you want to live comfortably later, you have to stop the rusting of your money….now.

Here’s how.

Don’t dos:

  1. Save money, but don’t just put it in a savings account.   .0000014% is a nice way of saying 0% interest on your money.  I would only keep your family emergency funds in here or in a money market account.

  2. Don’t do CD’s (Certificate of Deposit).  A 1.5% rate of return is still a -1.5% loss when factoring for a 3% inflation rate.

  3. Don’t invest into high risk investments if you can’t afford to lose those funds.

  4. Beware of leveraging too highly in any investment.  Leveraging too highly is akin to building a house of straw, with any given market wind you could lose all of your equity instantly.  (I.e.- this was the cause of the recession our country just went through.)

  5. Don’t tell yourself you’ll worry about investing next year.   At age 55, it will be too late and poverty will be hunting you like a pack of wolves.



  1. Do keep an emergency reserve of liquid funds that you can access quickly and without penalties in the event of a job loss or financial tragedy.

  2. Research Investments.  Talk to professionals.  Ask them what your “After Tax, After Fee” rate of return will be on your investment.  The further above 3% the better, though remember that the higher and faster the balloon rises, the sooner it may pop and a lot of it was just hot air anyway.  In other words, don’t believe everything you hear and don’t just follow high numbers.  Look for quality investments.    

  3.  Seek professional advice you trust.   I still seek professional advice on frequent occasion from attorneys and accountants.    It’s better to lose a little to due diligence costs than to lose it all in a mistake.  You’ll make it up on the good investments.

  4. Start investing right now.  The temptation will be to start tomorrow, to start next month, next year, next time you get a raise, etc.   The path the financial freedom is simply the one you start walking down.  You can be successful on any of them and as with all paths we choose, the more experience we gain, the better we get at making good choices on those paths.


It’s your turn to conquer the world, so take it.    


Written by Mark Bitton