Struggling to Stay Rich. Market Gains Run Empty in May
Table of Contents
If it’s not one thing, it’s the Stock Market
Inflation, Gas Shortage and No Masks
May 2021 was a wild month. It’s kinda unsettling how most months are this positive and catastrophic at the same time. I’ve been warning people about grocery store prices for months and it finally hit 4%. Cost of goods is going way up and there is almost no way to stop it.
In economics, inflation is generally viewed as a rise in economic price levels over a period of time. Each unit of currency for this example the US dollar, buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money. Translations, this is a real loss of value for every transaction.
Intuitive ways to stop this; buy less for a period of time. Invest more for growth over the loss in inflation. For example, if you have your money in a savings account at the bank for 0.01% while inflation is at 2.6% for the year, it means you are losing Negative 2.59% of your hard earned money annually.
Try not to stand flatfooted on this one.
Inflationary Opportunities
There are asset classes that perform well in inflationary environments. For example, tangible assets like real estate and commodities.
Some specialized securities can maintain a portfolio’s buying power including certain sector stocks, inflation-indexed bonds, and securitized debt.
Additionally, the value of art, rare coins, comic books and other NFTs rose about 20%. Even, Baseball cards are up 15% to 40%. There are also costs to storing collectibles as well as tax and liquidity considerations, so Ivy says investors should plan on holding them for at least 10 years.
A Million More Problems in May
Back to business. The White House opening up as the rest of the country to the mask-less paradox. If you have been vaccinated, then you can go maskless but the tricky part –> who is vaccinated and who isn’t remains unclear. While the Centers for Disease Control and Prevention said fully vaccinated people can be indoors or outdoors without masks, the mask rules still apply in some settings.
With that said,many welcomed the unofficial start to summer and back to business as usual.
Only the future will tell however I suspect that some will fare better than others. Alas the old sayings hold true, “You can’t save yourself into wealth“ nor “Can debt freedom guarantee you wealth attainment.”
This article will showcase the TNFG monthly Net Worth Breakdown for May 2021 where making money make sense. Additionally, there are always usable financial nuggets and aha moments that might help you along the way.
Building Toward Our May Goals
Strategic Changes from May and beyond
Beyond tightening the war chest for the second half of the year, I will definitely looking into property management. Going back and forth for showing in Florida is not my cup of tea. By 2022, It’s time to implement a 3-yr aggressive pay off strategy to the tune of $25,000 extra per year.
Secondly, time to focus on making the back half more productive by publishing new paid content for passive income of maybe $50 per month. My wife and I will be picking up more $NIO stocks, High-dividend ETF stocks like $FDVV, Travel from Cruises to $JETS and Consumer Staples. People are brewing to spend us back to a booming economy.
We are here to support their urge to spend.
Here’s the Quick Summary:
The world is changing post vaccine. There is a rise of mental health issues and a slide back to poverty for a lot of people. The transition will be harder by Christmas 2021. Until then, my family plans to keep our heads down and plan for the next international trip in 2022. This is what half Milly folks really do.
All in all +2.85% after a massive drop. The cash value growth shy of $15,000. Overall, we are missing the mark since inflation for May was likely 3.1%. Mathematically, that’s 2.85%-3.1% or -.025% in the red.
American households should be concern and slow down the rate of spending post reopening since money is now worth less. Not worthless but worth less.
Our Expenses for May 2021
Taxes and Food?
I’ve been hinting at price inflation for months. The news media is finally catching on to this problem.
Our Food & Dining budget went from $500 to as high as $800. That’s a 60% increase from 2019. No matter how we slice it, this is likely the new normal.
My Wife is slated for various domestic trips from weddings to babies. Translation, my Iceland trip in 2021 is on ice for now if I don’t find consistent passive income.
The negative in Business Services is a good thing since my wife picked up her side hustle bringing in an extra $3,000 per month.
1. So Where were the May wins?
In order; Debt Repayments, Investments and Cash
Debt Repayment in 2021 is going well
The goal for total debt repayment is $100k in 13 months. This month was a great push for $4.3k improvement. While student loans are in forbearance, this is the best time to work to pay off debts before they pop back up in October.
Bumping road for investments
Although we kept on investing. Our heavy tech allocation is biting us in the A**. Total May growth almost hit $4k. December will likely be the best time to evaluate investment performance as we stumble back to normalcy. Another thing that I noticed is that we were overweight on Technology going into 2021. I should have rebalanced and took some wins off the table.
If you need tips on how to set up a solid portfolio, read How to Build a Long-Term Investment Portfolio Earning 250%.
Cash holdings increased Slightly
We have to get that number back to $2,500. That’s our Acid net/max EF so that we invest more than keeping money in our savings at less than 1%. The net/max financial plan hasn’t failed me yet. One built in feature was a medical claims from the HSA.
Long story short, I have over $4,000 medical/dental claims pending. Since I paid for them out of pocket in the past, I am able to claim them at any time tax-free. HSAs are truly the ultimate Quadruple tax advantage asset.
2. Where did we falter?
Food and unintended expenses
As stated early, I can’t control food cost due to inflation, shipping costs, and global labor shortages. And I can’t control unintended expenses like my wife’s passport renewal for $110 or the $50 key replacement for the mail box, etc. Issues truly come and go.
3. What is the Next Step for Us?
Loads of travel in June. The Wife’s BDay month and getting back to shape.
Still working on e-Books or other items for the website
Beyond that here’s our overarching goals for 2021:
- Keeping our expenses where they should be. “So stop equating happiness and social acceptance based on the money you spend.“
- Get to $45,000 in M1 Finance focusing on Growth and Dividend Income that generates at least $2,500 in passive income in 2022. Check out the portfolio in real time. If you like the platform and want to start investing, I have the $30 for $30 referral if you need it – https://m1.finance/SYdqDJ2SyADC.
- Shooting for a sustained investment rate with the push for $1 Million net worth in 2 Years. To help monitor your savings, cash flow, net worth, investments, retirement and more FREE with Personal Capital! Sign up with my link & get $20 Amazon gift card. *Terms apply. https://pcap.rocks/lawrencegonz
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