šš¼ Hello wealth builders! Why are you receiving this? You want to be in a good place financially. This is where I share educational content and practical tips on personal finance, so you can get to your good place, wherever that maybe.
Welcome to the seventh issue of the hellogoodplace (HGP) newsletter.
For many of you, this is the first newsletter you are receiving from me. There were several personal changes last year (all good) that took me off my newsletter routine, but I feel adjusted to my new life and am ecstatic to be back with you all.
What Iāve been up to:
š Digital Nomad
Iām leaving San Francisco this month, a place Iāve called home for the last 15 years. Iām fortunate to have joined a company last year that not only fulfills my lifelong dream of democratizing financial wellness, but allows me to be anywhere (almost) as a true remote-first company. I plan to spend time primarily in Los Angeles and Seoul, but also in New York, Honolulu, and hopefully more.
šŗ Ā Instagram
I received feedback on my Instagram page from a good friend recently. In the most loving way, he said, āit feels like a stale powerpoint presentation.ā Iāve turned to posting 60 second videos, and itās been fun and challenging to say everything I want within the time limit. I continue to struggle to post on a consistent basis, but Iām learning and improving my process. Itās been a great example of learning by doing.
Market UpdateĀ
EVERYTHING (except for oil) ended the first quarter of 2022 in red, behind the backdrop of soaring inflation, $6+ oil prices at the pump, monetary tightening by the Fed, and the war in Ukraine. US stocks fell 4.60% for the first quarter of 2022, breaking a streak of seven positive quarterly returns. But that wasnāt as bad as foreign stocks, where developed foreign stocks fell 4.81% and emerging markets stocks declined 6.97% for the quarter. US bonds also fell, down 5.93%, and will continue to face pressure as the Fed is expected to raise interest rates several more times this year. The good news is that newer bonds should pay higher interest rates. Global bonds fell 6.16% for the quarter as Europe is also experiencing record high inflation at 7.5%, and investors expect that will lead the European Central Bank to also start tightening their monetary policy.Ā
Inflation
Inflation has been running wild this year with the latest reading at close to 8% for the 12 months ending in February 2022. That is the highest in 40 years - since February of 1982. Inflation has a significant impact on your personal finances because it reduces your purchasing power. In other words, everything gets more expensive.Ā
Inflation could get worse before it gets better, but the good news is that the current rate of inflation is unlikely to persist long term. The Fed plans to continue increasing their interest rates to control inflation, and we should also see inflation come down once the lingering supply chain issues from the pandemic gets resolved, and a peace deal (hopefully soon) is made in the war in Ukraine.
But that doesnāt mean inflation will go away completely - inflation has averaged roughly 3% in the US, and even at that rate, your purchasing power gets cut in half every 24 years.Ā
So how do you protect yourself and your money against inflation? The best way is to invest, because stocks and even bonds have averaged above 3% over long periods of time. Make sure you are invested in a diversified portfolio of stocks and bonds with an asset allocation that is aligned with your goals.Ā
While it can be obvious to see the changes of fuel prices at the pump and the cost of other goods go up during inflationary times, these increases offer a reminder of how important it is to understand our own spending trends. And that awareness is where your personal budget comes into play. As inflation concerns begin to increase - use this time to rethink your budget and focus on things you can control - like your personal spending plan.
To being in a good place,
Daniel