Do you have high, excess cash in your business or personal savings account earning close to 0% interest while inflation is recently greater than 6%? Do you find traditional alternatives such as CDs or money market accounts similarly unattractive given interest rates 0.1% to 0.7% and long commitment periods greater than 1 year? Do you […]
Which investment solutions that you own will perform well in an inflationary environment? At Essential Partners, we build portfolios for all types of economic environments, including rising inflation. Despite inflation being littered across the news and social media daily, the past 40 years have conditioned individual and institutional investors to not worry about inflation. This […]
What is your compass to traverse global financial markets and how does that translate to your portfolio? Do you own investments that perform well in all four economic environments? There are two core marcroeconomic variables that drive financial market changes; GROWTH and INFLATION. Consider a simple micro example as it relates to equities/stocks: Sales growth […]
Have you considered the mindset and thought process differences between operating a business for personal cash flow vs. earning an investment return? Have you performed a comprehensive financial forecast for you and your family considering your financial situation post-sale? Do you understand your investment options and a range of investment returns? Is your nest egg […]
Do you know that in 2 of the last 5 decades, stocks produced negative real returns vs. cash? What assets do you own that perform best in the decades when stocks perform worst? Do you own any assets that will perform well when inflation is high but economic growth is low? “Gold is money, […]
Investment portfolios that are balanced to various economic and inflationary environments will at times contain certain holdings with unrealized capital losses. Tax loss harvesting is a tactical portfolio strategy to sell these holdings to capture the capital losses, which can then be used to offset the capital gains realized elsewhere in the portfolio. Further, the […]
Do you know the true cost of your investment holdings? Does your salesperson/broker receive commissions? Does your salesperson’s firm capture any special distribution or marketing fees at your expense? Does your salesperson have sufficient training? Does your “robo-advisor” force you to hold too much cash? Warren Buffett’s partner Charlie Munger is famously outspoken regarding the […]
Do you have a disciplined process and documentation for your investment strategy? Does your salesperson/broker provide an Investment Policy Statement to set clear investment objectives, guidelines, and expectations? “Successful investment takes time, discipline and patience.” – Warren Buffett In our experience, no serious pension or endowment would invest without first creating an Investment Policy Statement. […]
Will your salesperson/financial advisor analyze investments they do not bring to you where they cannot earn fees or commissions? Has your salesperson/financial advisor ever thought your investment idea was a great idea if it meant you would be pulling the money from their control and fee structure? Has your investment advisor ever analyzed a company’s […]
- Do you have high, excess cash in your business or personal savings account earning close to 0% interest while inflation is recently greater than 6%?
- Do you find traditional alternatives such as CDs or money market accounts similarly unattractive given interest rates 0.1% to 0.7% and long commitment periods greater than 1 year?
- Do you understand your other options?
“The one thing I will tell you is the worst investment you can have is cash.”
– Warren Buffett
We are living in a state of financial repression that has harsh consequences for savers. Financial repression is commonly known as financial policies that lead to savers earning returns below the rate of inflation. When inflation is greater than the return on your cash, your purchasing power is being negatively impacted. This can go on for decades as the U.S. experienced in the 1920’s and 1940’s.
Consider the following example. Today, $1,000 in a bank account gives you the ability to purchase $1,000 of goods and services. Assume inflation moderates from 6% currently to 4% annually over the next 5 years and your cash is still earning 0%. In 5-years, your cash will still be worth $1,000 but the goods and services will now cost $1,217 and you lost over $200 in purchasing power or greater than 20%.
Now consider the same scenario above but that you have $1 million in cash and you lost $200,000 in purchasing power or even $10,000,000 and you lost $2,000,000. This is a large, hidden tax. Over 10 years in this example, 48% of your purchasing power is lost or $480,000 for each $1,000,000.
Essential Partners works with businesses and individuals facing financial repression and lost purchasing power to help solve this large but hidden tax on cash balances. We invest in a variety of publicly traded investments to earn a return yet can be converted to cash in days. This is particularly important in case the excess cash is needed unexpectedly.
Essential Partners utilizes our founder’s two decades of institutional investment experience to invest in various public traded investments while also considering strategies that have true diversification to the core four economic environments.
Please refer to our Insights page for our views on inflation and the core four economic environments.
Investment advisory services offered through Essential Partners, a registered investment advisor. This document contains general information that is not suitable for everyone. The information contained herein should not be construed as personalized investment advice. Past performance is no guarantee of future results. There is no guarantee that the views and opinions expressed will come to pass. Investing in financial markets involves gains and losses and may not be suitable for all investors. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security.