Though I’ve alluded that inflation is bad for us, we haven’t given this insidious scourge the attention it deserves. Inflation is like the decay you find in an aircraft engine that hasn’t flown enough.
High Finances: The Engine Decay of Personal Wealth
Finance expert and pilot Jason Depew talks about inflation, how much it can cost you, and how you can fight back against it.
Key Takeaways:
- Inflation causes money to lose value over time, likened to an aircraft engine degrading due to underuse regardless of flying hours, emphasizing "years since overhaul" for engines and inflation for money.
- This "economic corrosion" averages about 3 percent annually, meaning idle money significantly loses purchasing power (e.g., a dollar losing half its worth in 23 years).
- To combat inflation, it's essential to invest money in vehicles like S&P 500 index funds, which can provide returns that significantly outpace inflation.
- Similarly, to prevent aircraft engine decay, owners should ensure regular use, ideally through partnerships, which also helps distribute costs and keeps the engine healthy.
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