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Investing & Wealth During Inflation

I’ve been coming across the rather fear-inducing news about upcoming inflation. Well, inflation has been with us since the beginning of the pandemic, though it’s fair to expect it to get worse. Let’s talk about ways to cope and financially deal with inflation. Here are 5 things to consider for physicians in their wealth accumulation wealth for the upcoming inflation:

1. Get Earned Income

Income often keeps up with inflation. Not always quickly enough but good enough that you won’t be too far out of pace.

If you are in a current role where you’re getting paid $100-$150 per hour as a primary care or urgent care doctor you are already underpaid. Often the only way to remedy this is to jump ship and apply for a new position somewhere else.

It doesn’t matter if you’re getting your income as an employee (W2) or independent contractor (1099).

2. Invest Your Money

Money sitting in a checking or savings account will lose value. But money invested will often keep up with inflation.

I’m mostly invested in index funds which are a mix of stocks. These will often go up in value according to inflation.

Peer-to-peer lending might not be the best option. I am currently invested in Mintos

And don’t forget to rebalance your investments. It’s likely that your stocks and bonds will perform differently and you want to maintain your proper asset allocation.

3. Purchase Real Estate

Whether you purchase your own residential property to live in or invest in rental income properties real estate is a good option because it tends to keep up with inflation.

Even better, a mortgage at a low rate is something you’ll pay back with inflated dollars. So if you have a $500k mortgage at a fixed $2k per month you’ll end up paying it back with inflated dollars – that’s quite a good financial proposition.

4. Curb Your Spending

I don’t mean that you shouldn’t spend money. But buying an expensive phone or laptop during inflation could potentially hurt your net worth.

Of course, some spending no matter how expensive makes sense because it’s something you can write off in your business or use for income-generating purposes.

But if you don’t have to eat expensive meat or cheeses which likely will shoot up quite a lot during inflation you’ll save a lot. It might not seem like much if you’re a physician but that’s money you can otherwise invest.

5. Start Your Own Clinic

When inflation is in the air it’s a great time to start your own business. You can control your write-offs and you can charge fair prices for your services.

It’s not to say that it’s a bad idea to start your business during deflation or normal economic times. But I find that when there is the inflation fear all around people are going to be more cautious about how much value they are getting for their money.

It’s more likely that people will stop their health insurance and pay cash for clinical services in a private clinic.

Avoid Fear During Inflation

Fear won’t serve you a nickel when it comes to inflation. Inflation will do what it will but you can still have control over your spending and income.

Focusing on what you have control over is the most important. Read up on inflation and understand the difference between hyperinflation and regular inflation – most likely we’ll only deal with the latter.

I would also suggest not following the news, which has been my MO since 2014.

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