In this video the presenter explains why the current 8.5% inflation rate— the highest in four decades— erodes cash held in bank accounts and urges viewers to protect their purchasing power. He outlines concrete investment options: government‑issued inflation‑linked securities (I Bonds and TIPS), noting their current 7.13% rate, annual $10,000 purchase limit per person, liquidity after the first year, and how they can serve as a cash‑reserve substitute. He then discusses real assets that historically perform well in inflationary periods, including real estate (both residential and commercial) for its price‑appreciation and rent‑adjustment ability, gold as a non‑cash‑flow store of value, and Bitcoin as an alternative digital store of value. The core of the talk pivots to three principles Warren Buffett has advocated for investing during high inflation: (1) target businesses that can raise prices without losing customers—especially B2B firms with high switching costs; (2) favor companies that can quickly increase gross margins, i.e., growth firms where fixed operating costs lag revenue growth; and (3) invest in one’s own earning power through education, certifications, or new skill acquisition. The presenter emphasizes that inflation is likely to persist for a few years, so proactive portfolio adjustments and personal development are essential. A disclaimer notes he is not a financial advisor.
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What's up guys. In today's video, we're going to talk about how to invest your money in periods of high inflation. Okay. That's right now, by the way, inflation is at record highs over the past 40 years. It just came out March of 2021 was 8.5%. Okay. This is insane. We haven't seen this stuff since the '80s. Also in today's video, we're going to talk about 3 different things that Warren Buffett has encouraged people to do. Don't just take it from me, but 3 different things that Warren Buffett has encouraged investors to do. Periods of high inflation. All right, so let's get into it. Inflation, again, record highs in the past 40 years. Your dollars in your bank account, they are just rotting, they're deteriorating if you leave them there. It, you know, you need to invest those dollars. Now keep in mind, I'm not a financial advisor. This is just opinions of my own or opinions of Warren Buffett. First up, uh, you know, there's kind of this iconic thing called TIPS, Treasury Inflation Protected Securities. So similar to them, I bonds. Okay, what they are is you can go buy a bond from US government, they will pay you out like a small premium plus whatever, you know, inflation came in at the CPI index. So they readjust like every 6 months up until May 2022. They are paying 7.13%. It's likely between May and November to go up to like 8 or 9% return. Like, that's crazy. That's a great return to cover, you know, inflationary costs, you know, while we're weathering this storm. Now there's a couple of things there of why they're not great. There's limits on them. You can only buy $10,000 a year, so each person in your family, so you, your spouse, so you could buy $20,000. They're pretty liquid though, which is great. You can't access them for the first year, and then they're basically liquid after that. They're actually 30-year bonds though, so between years 1 and 5, if you like want to redeem them, you just lose the interest from the prior 3 months, which isn't terrible. Pretty liquid after the first year, and then you can just rebuy those. A good way to look at I bonds in your portfolio is just something that Almost like a cash reserve. Like if you want to keep, you know, a lot of people just feel comfortable having cash, right? If you want to have 50 grand or 100 grand or whatever, whatever your cash runway is sitting in like a cash reserve, just take a good portion of that and put it into I bonds. But totally, totally your discretion. I just bought something the other day. So you know something that you can do with a little bit of your money to keep it protected. Okay, what else can you do in periods of high inflation? Real assets. Okay, something that produces income. So real estate has demonstrated to be a very robust asset class in periods of high inflation. It tends to appreciate in price. That's your home value. That's commercial real estate. All real estate tends to do that. And same with businesses. I'm going to wait on the business thing in a second because Warren Buffett addresses that. But like the nice thing about, you know, real estate or businesses is you can always adjust the price, right? If inflation's going up like crazy and your rents aren't meeting, they're not paying the bills or whatever, then you can raise rents like $30, you know, and on a 100-unit facility, it'll, it'll cover, cover the costs. So gold, you know, historically been one that does well in periods of high inflation, kind of an inflation-protected element of your portfolio. Now, the thing about gold to remember is that it just sits there, right? It does not pay out. It does not cash flow. It just, just kind of something that you hold on to and you sit on for a while. So, I mean, I always like to I have a little gold in my portfolios, but I'm not super big into it. Some people are. I personally like Bitcoin better, but that's just me. Okay, so let's pivot a little bit and let's talk about these 3 things that Warren Buffett says to do in periods of high inflation. The first of which is he recommends, he says, invest in businesses with the ability to increase prices without consumer backlash. So, you know, think about it. You know, if I really like Campbell's Soup and they go and raise the price a dollar me and, you know, I've got the generic brand right next to it. There's easy replacements. If I'm on a budget and trying to watch my costs, it's easy for me to reach over and grab the generic brand. Consumer goods, it's difficult to raise prices unless everyone is, if there's a lot of competitors in your market. Now, in contrast, in B2B businesses tend to do a lot better in high inflationary environments. Why? It's because in business services, there's kind of this barrier to entry. So like, for example, here at Investment Fund Secrets, our sales team and fulfillment teams, they use a software called HubSpot for, you know, kind of CRM, you know, customer client relation management software. Let's say they went and raised prices on us, you know, a couple hundred bucks a month. Would we immediately switch to a lower competitor? I mean, maybe if we were trying to cut costs, but for most businesses, It would cost us more to switch to like Salesforce or, you know, someone else just in terms of like training, of helping our, you know, getting all of our sales team and fulfillment team and coaches familiar with the software. There's just kind of this lag in business. So most businesses, you know, tend to absorb those costs a little better. So B2B tends to perform a little better in high inflationary environments than B2C. Because B2B businesses will just raise their prices. So the second thing Warren Buffett mentions is invest in businesses with the ability to increase gross margins quickly. Simply put, just invest in growth companies, right? Like if you can, because there's kind of, you know, in business there's the cost of goods sold or services, and then there's sales and administrative costs. If you can increase your revenues, you know, obviously your cost of goods is probably going to stay the same, but that that bottom part of the balance sheet and income statement tends to not increase as much. Your sales and administrative expenses, right? They're fixed costs and not variable associated with the income, you know, that your profits are bringing in. You know, that's one thing that you can do. It's just, you know, invest in growth businesses. Last, which I think is really, really interesting that Warren Buffett mentions, is he says invest in your ability to increase your earning power. What is that? He goes on to say like it's education, right? Invest in a new skill set. If you want to be more qualified for a job, go get that MBA, go get that CFA designation, you know, make yourself a better candidate, learn a new skill. Any of you guys that are watching this video are, you know, perfect exemplars of that because you're learning how to start funds. So, you know, invest in yourself, Start a new skill and increase your earning potential. So obviously inflation, I don't think will be here forever. I do think it'll be here for a couple of years though. I don't think it's gonna be gone tomorrow. So, you know, I would be very aware of this, of how you're managing your money, how you're investing in yourself, you know, what you can do to improve your lifestyle with these kind of external conditions. Hope you guys enjoyed the video. Talk to you soon.
