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Welcome to How to Retire on Time, a show that answers your questions about all things retirement, including income, taxes, Social Security, healthcare, and more. This show is an extension of the book How to Retire on Time, which you can grab today on Amazon or by going to www.howtoretireontime.com.
This show is intended for those within 10 years of their target retirement date or for those are are currently retired and are concerned about their ability to stay retired.
Welcome to How to Retire On Time, a show that answers your retirement questions. My name is Mike Decker, founder of Kedrick Wealth, and joining me in the studio today is Mr. David Franson. David, thanks for being here.
David:Hello.
Mike:Get your questions answered on our show by texting them to (913) 363-1234. Again, that number (913) 363-1234. David, let's dive in.
David:Hey, Mike. Do you
David:think inflation is under control? No. So at the time of this recording, where we at? We're June 2025?
Mike:Yeah. The reason why I don't believe inflation's totally under control is not a political statement. It is not any sort of dig on Trump and his tariffs. It is the uncertainty of historical happenstances.
David:Yeah. Tell us what you mean.
Mike:So we've had two or three years of hyperinflation, and then it was done, and we've headed in the right direction. And I think Powell has been a very intelligent Fed chair even though Republicans now hate him, and I don't know what Democrats think of him, frankly. But he's just hated right now because he kept the Fed's interest rates high. But notice how interest rates are getting slowly closer and closer to where they should be. You want the Fed's rates to be slightly higher than inflation because you wanna keep inflation low at around 2%.
Mike:Inflation continues to get closer and closer to that target. So if Powell continues to ignore Trump, maybe we have solved inflation. If the markets crash, if the tariffs go haywire, or if there's a delayed effect on the tariffs, an unintended consequence that we're blindsided by, inflation would come roaring back. Let me give you just a quick recap of some inflationary examples. 1918, 1919, we had inflation due to the war, World War one, and that was very detrimental to the American citizen.
Mike:We got through it. Then after World War two, we had another inflationary episode. Only a couple of years, just seven years. Now notice the difference. World War one, and we had inflationary issues for two years.
Mike:After World War two, it was seven years. What typically happens is inflation gets out of control, it then is brought into control, and then something happens, a geopolitical event, a black swan event, a market crash, banking, crediting the bond market, whatever it is, something happens that causes people to be spooked, things shift, and it comes roaring back. So we had seven years, roughly speaking, after World War two of inflation. We don't know today if this is a two year episode or a seven year episode, but it could be a seven year episode. It could come roaring back.
Mike:No one knows exactly what's gonna happen, and the unfortunate part is many of the economic predictions, I believe, are more political than base in economics. And people will refute me for saying that. I don't care. I don't care at all because you you can pay anyone to do a study and get you what you want. If you ask enough people what their opinion is, you're gonna find like minded people.
Mike:An economist may not be political, but you can still cherry pick the economist and say, oh, this one agrees with them. Whatever we wanna push, so we're gonna highlight him. Right. So what I'm saying is the economist might genuinely leave their prediction. They might not be political, but the reports that you're seeing may be politically highlighted on both sides of the equation.
Mike:Right. And that's a problem. It scares people in the wrong way, or it gets people excited about the wrong way. And then you've got the end of the fifties, sixties, seventies, and the early eighties, where it was like fifteen, twenty years of inflationary issues, and here's what happened. Inflation got out of control.
Mike:The Fed increased interest rates. Inflation went down a little bit. The Fed dropped rates too soon. Inflation came roaring back again, worse the second time, and then the Fed increased interest rates. Inflation then came back down.
Mike:It was fine for a while, and then the Fed dropped interest rates too soon again, and then inflation comes roaring back again. Mhmm. And then one of my heroes, you know, people like their superheroes or Marvel comics or whatever. They've got their favorite athletes. Paul Volker, you know, Fed chairman.
Mike:He's one of my heroes. We all have heroes. But he was our version, in my opinion, of Margaret Thatcher, the iron woman that got England's economic situation in order. Paul Volcker straightened out our economy, straightened out our our inflation, because he jacked interest rates up super high and held them there until inflation became under control.
David:What was that? Early eighties? Nineteen eighties?
Mike:Yeah. Okay. And so inflation could come roaring back, and you can make all the economic predictions you want. It's still a guess. And that's not to disparage or discredit any of them.
Mike:It's good information. We wanna be aware of it. We wanna study it, but we still need to be prepared for in case they're wrong. If you remember two or three years ago, a 100% of economists predicted a recession that never happened. So we need to understand economists are doing their best.
Mike:They're very intelligent people, but even they can get it wrong. And so we need to be prepared for maybe inflation was a two year episode, maybe it was it's going to be a seven year episode, and it comes roaring back again, or maybe it's a twenty year episode because of government debt, because of the transition into a potentially a tariff economy, whether tariffs are actually just used for negotiation purposes, or maybe we're gonna go into tariffs long term. No one really knows. It's kind of an unfair game for the market. And then there's other factors we just don't know.
Mike:And so until we have four, five years where inflation is steady and consistent, I am going to remain concerned that inflation could come roaring back, and I will continue to preach the importance of having assets in long term vehicles like stocks as a part of a holistic portfolio intended to help hedge against inflation.
David:Yeah. I was just gonna ask, besides sort of higher prices, how is inflation high inflation, like, hurting our our listeners, like, in their portfolio? And I think you just touched on one of the reasons there.
Mike:If you're in cash and cash equivalents and things are inflated, if inflation gets out of control, then your cash goes down in value. It's like a market crash under the inflation umbrella. You have stocks and inflation's happening. Inflation really is the economy grew too fast or something grew too fast. That's the oversimplified definition.
Mike:So if you're in stocks and the economy grew too fast, well, you're participating with the inflationary adjustment because you're in the market. K? That doesn't mean all stocks are gonna grow. Stocks have risk, so be wise about what investments you choose. Real estate could be a favorable component to help hedge against inflation, and you don't necessarily need to have hard real estate like a rental portfolio.
Mike:Many people don't wanna be a landlord. I personally have no interest in being a landlord. That's right. It's not my forte. Some people love being a landlord, and good for you.
Mike:For those that love being a landlord, wonderful. Keep being a landlord. You should not feel obligated to sell your portfolio because now you're retired. If that's your thing, keep doing it, and good for you. That's wonderful.
Mike:There are many ways to get rich. But a real estate portfolio could be a great way, and there's other ways you could do privately traded REITs, real estate investment trusts to hedge against inflation in the real estate kind of sector. There's a lot of other ways, Delaware statutory trust and so on, that you could hedge against inflation. And then you've got also gold, silver, and crypto are inflationary hedges, but they're not as good as people think. So, yeah, gold and silver can do well when inflation's getting out of control, but gold and silver don't do very well in other times where inflation is low and the markets are growing or other certain economic environments.
Mike:So if you want to do a quick study, because I already published this newsletter, so it'll be a while till I really comment on gold again, but look at the price of gold between 2000 and 02/2010, look up the gold ETF. I think 2005 was the most popular gold GLD came out, so 2005 to 02/2010, and then look what gold did from 2010 to 02/2020, k, compared to the ETF and the S and P, and just start taking segments and seeing what really won, what really did better. And you start to understand that gold's not the end all be all. It can be an appropriate part of a portfolio, but again, there's no such thing as a perfect investment product or strategy. So going all in on gold because the US dollar is gonna go bankrupt.
Mike:It's not. K? And if it did, you've got bigger problems to solve anyway. You're not gonna shave off a little bit of your gold to buy bread. That's not really a thing.
Mike:So what's the purpose of your gold really? And then you also get to consider if the US dollar is down, well, you could take your stocks and just sell them in a different currency that maybe hasn't collapsed in that worst case scenario. I mean, there's just so many ways to hedge against inflation. There's so many ways to hedge against currency devaluation. I think people, especially if I'm to be very forward about this, especially conservatives, I think, are being taken advantage of by these very manipulative marketing campaigns when you go on to the conservative channels of anger, debt, all these things, get a self directed IRA, and buy gold today.
Mike:It's what they sell. So, of course, they're gonna make a convincing argument for you to put a lot of money in gold because that's how they make money, and that's the only way they make money. And then in their disclosures, many times, it's like, well, you know, this isn't financial advice. Consult your financial professional, tax professional, blah blah blah. We're just selling gold.
Mike:That's really what they're going on, but they do a very convincing job of scaring people into buying gold. Is gold a good or bad investment? It's just it's not even investment. It's a hedge against currency. It's a thing you can buy that has intrinsic value.
Mike:And is it appropriate for portfolio? Sure. Most of my clients have gold as a part of their overall portfolio. I have no problem against it. But you don't do it all in or all out or do it out of fear.
Mike:You do it by balance.
David:Yeah. Probably shouldn't be doing anything out of fear. Right?
Mike:Yeah. Fear and greed are what help people stay poor or make poor investment decisions. Mhmm. Fear and greed. Your emotions follow systems, not sentiment.
Mike:That's all the time we've got for the show today. If you enjoyed the show, consider subscribing to it wherever you get your podcast. Just search for how to retire on time. Discover if your portfolio is built to weather flat cycles or if you're missing tax minimization opportunities that you may not even know exist. Explore strategies that may be able to help you lower your overall risk while potentially increasing your overall growth and lifestyle flexibility.
Mike:This is not your ordinary financial analysis. Learn more about Your Wealth Analysis and what it could do for you regardless of your age, asset, or target retirement date, go to www.yourwealthanalysis.com today to learn more and get started.