Has Inflation Finally Peaked? Inflation 2022

In this episode of Cut Through The Noise, Anthony Saffer, CFP®,CKA® and Alex Okugawa, CFP®, CEPA®, CKA® tackle the hottest topics in financial markets, financial planning, and life, including:

► Depression level declines for certain stocks

► Inflation causing a breaking point in spending?

► Where should young investors start?

► Can I build investments to prepare for a long-term care event?

Show Notes:

Full transcript:


Anthony Saffer & Alex Okugawa

Full Transcript:

Alex Okugawa 0:00
Hi there and welcome to our segment cut through the noise where today we answer your questions that we’ve been hearing throughout the month. Today we’re talking about depression level stock declines inflation, where should young investors start, and how to prepare for a long-term care event? Stay tuned

Hey, there, it’s Alex and Anthony from One Degree advisors. Today we’re talking about bear markets inflation. I mean, it’s been really hot. I mean, there had been depression level style declines in certain stocks lately.

Anthony Saffer 0:33
Especially in those popular names like Amazon, Netflix, Peloton, and Zoom. And these are stocks that were high flying during COVID and stay at home. I mean, depending on the day you look Amazon’s down 30% Netflix zoom is down over 60% These are huge drops.

Alex Okugawa 0:50
Yeah, I kind of feel like it’s like that The Stay At Home bubble right people talk about like the tech bubble. That burst I feel like this is the stay-at-home and in a name. Yeah, everyone would you know everyone is staying home their bike peloton, Zoom like these changes are here to stay there for the stock valuations are justified. And soon we’re finding out it’s a lot harder to pick stocks, then a lot of people will lead you to believe people, you know, the self-proclaimed EPS experts. Oh, just pick a handful of stocks. These are ready to grow. It’s hard in your entry point into the stocks is incredibly important. Yeah, those trends do change in I like this. So Jason, and I’m not gonna butcher the last name had a nice little tweet that shows the internal NASDAQ damage, which we’ll put on the screen here. More than 45% of stocks on the NASDAQ are down 50% More than 22% of stocks are down 75% And more than 5%. Down 90%. I mean, there’s a good chance a lot of those stocks will never recover.

Anthony Saffer 1:50
All right. The next topic is inflation. Is it? Are we at a breaking point in spending? March numbers we should be getting April here soon March, though, down up? 8.5%. As far as inflation?

Alex Okugawa 2:02
Yeah. And of course, that’s the question everyone wants to know is, are we at peak inflation? Is it going to start to slow down? I mean, I think that’s anyone’s guess, I think is a fool’s errand to try and guess where inflation is headed from here because it is unknown. But this is pretty interesting. So we’ll put this on the screen here. This was a chart from the Wall Street Journal, I’m sorry, not a chart, but a survey. And again, surveys aren’t always right. But it is interesting to see how spending might change and how people are reacting to this. So again, it goes through it based upon your level of income, it asks, you know, do you are you going to reduce the number of items you typically purchase? Do you buy more store-branded items, when possible? Do you wait to buy a big-ticket item, you can see for most of these cases, 40 to 50% of the respondents are saying yes to that, that they are going to slightly change their consumer habits. And I’d like to know other people that are watching this. I mean, if they’re changing their habits, how are they changing? We did recently make a video and I bonds, which can be a nice hedge for inflation, which we’ll post right here. And people can watch that as well,

Anthony Saffer 3:04
I think that maybe tells us something because there is a thought that when inflation is kicking in, people will spend more because they’re gonna next time they go the store, the prices are going to be even higher, exact. So if people are pulling back on their spending, I mean, it’s interesting to watch that. And you know, and ask the question, Has inflation peaked? I guess we’ll find out here.

Alex Okugawa 3:23
All right, next question here. So where should young investors start? I feel like I get this question a lot from parents, you know, sometimes parents, they want to help their kids out. They want to give them a leg up and get them started early. But oftentimes, it’s like, well, where do Where do I even start? And what I like to first ask is, well, what’s the goal? Right? Is the goal here to save for education? Is the goal is, well, you know, maybe education, but I’d also like them to have some funds, maybe if they want to start a business when they get older. Right? The goal dictates where we go from there. But it has to start with a goal. What’s the goal? And what’s the purpose? Again, when investing, you know, when you want to start investing when you’re younger?

Anthony Saffer 4:06
Yeah, and when young people are investing for themselves for the first time. It’s, you know, thinking about, Okay, what type of account do I want to open if I’m I’m saving for the future a Roth IRA, which can grow tax-free can be a fantastic tool, trying to keep investments simple, you know, using a broad-based index or index funds or ETFs can make a lot of sense if somebody is interested in like, my youngest son, Henry is interested in picking some stocks. So I helped them put some money in there and it just, it raises some interest, but it helps keep them engaged.

Alex Okugawa 4:35
Right. I mean, like for professional investors, or more seasoned investors, we might say, you know, ETFs are the way to go broad-based diversified education or evidence-based. For younger kids, they might be like, you know, passing out you know, when you’re talking about that if you pick a couple of names that they like, I don’t know maybe like Starbucks or Roblox those names have been you know, kind of dicey lately, but regardless, it keeps them engaged and interested which might be the most important piece.

Anthony Saffer 5:01
Yeah. All right. All right Knight platform for young investors. That’s why I just love that because I love seeing young people get involved when it comes to investing. All right, the last topic here is, can I build investments to prepare for a long-term caravan?

Alex Okugawa 5:12
And let’s face it, most people, they, they don’t want to be a burden to their kids or their family hear that a lot when, you know, they might have a long term caravan. And it’s one of those things that it’s unknown. But it’s looming over a lot of people’s heads. And the big issue is, if you don’t have a long-term care policy already, a lot of the long-term care policies, at least traditional long-term care policies are incredibly expensive nowadays. So people are in a bit of a conundrum, right? They’re thinking about that expense they want to prepare. But passing off that risk to an insurance carrier by balling it by buying a policy is pricey.

Anthony Saffer 5:53
Yeah, over the last several years, the insurance companies have realized that they were mispricing it for a year too low. And therefore I’ve increased the prices. So it does become difficult. And that’s where people need to ask if you know, they may need to self-fund. And so looking and saying, Okay, what could be the potential cost? And that’s difficult because you don’t always know for sure. But then saying, Okay, I’m going to keep a certain amount of my retirement savings. That’s earmarked for healthcare is a good view to take when you’re doing.

Alex Okugawa 6:19
So here’s what I like to do just to keep it simple without getting into a full financial plan. Genworth Cost of care is a great tool, which we will provide in the show notes. And then what I love about this tool is that you can search by your area, just to get averages and get a ballpark figure as to what different levels of care might cost in your area. So for example, in our area, on average, a home health aide might cost around $6,500 a month for what you need, right? A lot of people want to stay in their home for $6,500 a month.

Anthony Saffer 6:53
A gain, on average is what you might be looking at, it can be a wide range there. And I think they say that the average length of care is about two and a half to three.

Alex Okugawa 6:59
So take that baseline number, let’s say $6,500 a month, and say, you know, I want this care for three years. And know that long term care expenses typically outpace inflation, so give that an inflation rate of maybe five or 6% and then say, Okay, what do I need to save and build up in my investment portfolio to prepare for that event that might occur 10,20,25 years down the road.

Anthony Saffer 7:23
Yep. It’s not an exact science, but it’s worth preparing.

Alex Okugawa 7:27
And now let us know what you think. Leave your thoughts in the comments below. And if you have more questions or want to learn more about eye bonds, watch the video above we posted not too long ago. Great information on a high savings rate for your cash. If you enjoyed today’s video, please like and subscribe for more. Thanks for watching.

Want tax, investment, and planning strategies like this right to your inbox? Subscribe below!

We will keep your email safe. You can unsubscribe at any time.

This does not constitute an investment recommendation. Investing involves risk. Past performance is no guarantee of future results. Consult your financial advisor for what is appropriate for you. Disclosures: https://onedegreeadvisors.com/solutions/#disclosures

Retirement Recap.

Join the 1,000+ other retirees and receive weekly articles and videos to help you retire with confidence.

Subscribers also gain access to our exclusive monthly client memo that we don't share anywhere else.

We don’t spam! You can unsubscribe at any time.