The goal for any investment is to have it return a greater amount than what you put into it in terms of both time and money. However, in this elevated inflationary environment, your investments need to be working harder than ever for you just to keep from going backward.
With the headline inflation number over 8 percent — and some saying it is actually higher than that as not all essential living expenses are factored into that number — it is essential your investment choices perform better than ever.
What are the investment alternatives?
Suppose we accept that our goal for any investment is to perform well and better than inflation. In that case, we must consider all available options to maximize our investment returns.
1. Wage growth in 2022: If we look at our time as an investment, then we must include wage growth in the analysis of alternative investments to real estate. According to the U.S. Bureau of Labor Statistics from Sept. 13, 2022, real average hourly earnings have decreased 2.8 percent seasonally adjusted, from August 2021 to August 2022. Did you get a 9 percent pay increase this year? If so, good for you.
2. Stock market performance in 2022: Year-to-date total return for the S&P Index is down 17.12 percent according to MarketWatch. Add in the loss of purchasing power with inflation, and you are walking backward 30 percent in 2022. You can pick your favorite measure of market performance. They are all down similarly.