Wherever you live, you have seen the headlines about the return of lasting inflation. Long denied by central banks and politicians, a smart bet is that inflation in everything, from housing to food to gasoline to household goods, is here to stay. In other words, your savings will lose value expressed in goods and services, and you are forced to somehow get more income or savings to stay even. Maybe you can get a higher salary, maybe your investments in stocks and real estate appreciate, but in any case, you are now on the defensive to not lose money fast.
No Dominant Inflation-Beating Strategy Available
What to do as regular Joe to not be eaten alive by inflation? Where to put your money? Unfortunately, there is no clear-cut solution as each inflation wave comes in different clothes. Pundits on TV or in the press might suggest real assets like gold, art, or real estate that performed well in the 1970s; some now swear by crypto currencies; other say stick to stocks and “don’t do anything special.” One author who researched inflation in the past provides investment strategies and help for daily life based on where we are in the inflation cycle. Confused yet?
What Inflation Means in Daily Life
Everyone has necessary and discretionary expenses. Options to reduce necessary spending—like health care costs, housing, transport to work, taxes—are quite limited or only at great inconvenience, e.g., by changing the mode of transportation or moving to a smaller apartment. Not fun. Then there are the discretionary expenses, like going to the movies, spending vacations in Italy, taking your spouse out to dinner, and viewing your favorite pop star live in Las Vegas. These might be the type of expenses you will cut first–your leisure budget, your vacation budget, your eating-out budget.
How to Be Happy During Inflationary Times
What do people do if they reduce going out or vacation less? They spend more time at home. This brings us to how to be happier at home. You might upgrade your life at home, which means having better experiences at home. And this is where you might be able to invest in some goods that provide two benefits. First, they will make your life better and can be reused over and over again. Second, they might keep or even increase their value in inflationary times. If the economy and inflation really go badly (think inflation Venezuela-style) you will have a bunch of items for the barter economy which might be in place should your nation’s currency be destroyed along with its economy. But let’s not be too negative here. Let’s upgrade our home and see what we can buy now before it gets more expensive.
Some Ideas for Small Investment in Your Home and Happiness
Here are some ideas for small and bigger investments in your home and happiness. Notice, they are all about experience, not about upgrading the kitchen fridge or buying a bigger sofa. Musical instruments, beautiful books, toys for kids and adults like Lego® bricks, board games, CDs, Vinyl, and DVDs–there is a long list we can imagine. What do all these items have in common? They are real assets that you can touch and own them. They need only minimal maintenance and care. You can enjoy them over and over and over again, and pass them on to the next generation. They provide countless hours of fun, entertainment, and happiness. And they are the last to be taxed or confiscated in case of wealth taxes.
Musical Instruments
If you play the piano and have the change, now is the time to splurge on the Steinway you always wanted. Or, get a less expensive digital piano with which you can produce countless different sounds. Or the guitar to start you career as a rock star. Great musical instruments last longer than you might live. Don’t forget to stock up on sheet music as well.
Real Books, No eBooks
When it comes to books, shun eBooks, as you might never truly owe them (e.g., if bought from Amazon). Go for beautifully bound books of your favorite authors and genres instead and stock up your place to the hilt. Moreover, in the age of Cancel Culture with some books being taken off the shelves and out of eBook libraries, or being rewritten to be less offensive, secure your original copy now while it’s still available. Books can be real artwork; think large-scale printed books that contain replicas of posters, architecture, sheet music, paintings, and much more. Having a library at home, supplemented by some nice bottles of wine, will allow for countless blessed evenings.
Games for Kids and Adults
If your kid is into bricks or you like rare model trains, buy as much as you can now, as you can always sell them later. My shelf space is full of board games, some new, some old and rare; I am not aware of any social entertainment that has such a high return of happiness on investment. A $50 game might last a generation and provide thousands of hours of social happiness. Settlers of Catan anybody? No Internet needed.
Of CDs, DVDs, and Vinyl
Onto music listening: there are CDs, DVDs, and good old vinyl. I know, I know, they are so last century in the age of streaming. But if Spotify goes down or costs $100 per month, you will be happy to have a rack full of CDs. Don’t forget to have a replacement player on hand, just in case. Think about it this way–you can get the greatest recordings ever. And remember, you only own what you can touch and have in your possession. Above all, don’t make the mistake I made a decade ago when moving. I gave away my Vinyl collection for a song. Looking at prices now, it was probably the worst investment decision of my life. Luckily, my CD collection is alive and kicking.
Takeaway
Your investments in stocks and your house might or might not protect you from the worst effects of inflation. Ask your financial advisor for help with regard to the big-money items. But putting some money into a diversified portfolio of books, board games, and other items that might provide cheap bliss at home might be the happiest way to prepare for an inflationary future. There are even economic board games where you can mirror the increase in gasoline prices and bankrupt your friends. No tax accountant needed for these little charms of happiness either.
Have I forgot something that you can get and keep for a long-time, something that yields you and your family immense pleasure, and in case of need, might be exchanged for something else in bad times? Please let me know your favorite inflation-busting, pleasurable home investment!
© 2021 Michael Froehls – All Rights Reserved
