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Doing Nothing is Not an Option

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‘If it ain’t broke, don’t fix it’…well, guess what… It’s broken.

Things have changed significantly in the investment space in recent years, but for some reason, most people haven’t changed their approach.

You’ve heard it 100 times before - Interest rates are rising, inflation is everywhere, and bank deposit rates are close to 0%. Doing nothing with your money is no longer an option, yet it is the default position for so many.

During the 1980s, leaving your money in the bank was perfectly acceptable. Banks offered up to 15% on their savings accounts - Not a bad deal.

Diligently setting your money aside while it earned double-digit returns until such time as you could afford to buy your first home for a mere 30K was a pretty good deal all round.

But for some reason, people continue to do the exact same thing to this day despite the fact house prices are ten times higher, and bank deposits pay 100 times less.

The level of inertia here never ceases to amaze me.

Don’t Get Left Behind

When it comes to human behaviour, inertia is a powerful thing. People are inherently slow to change the way they have always done things.

We only ever change what is immediately and obviously damaging to use.

Unfortunately, the erosion of our wealth is discretely pervasive, so we often don’t realise what’s happening until it is too late. 0% return from your bank account seems manageable in the short run, but over longer periods, it has a truly profound effect on your future wealth.

To understand the longer-term effects of holding your money in the bank during an inflationary environment, consider the following example of the purchasing power of $10,000 in 1971, compared to today.

According to the Bureau of Labor Statistics consumer price index, prices in 2020 were more than 550% higher than prices in 1971. In other words, if you put $10,000 under your mattress in 1971, it would have the equivalent purchasing power of about $1,800 by today’s standards. Granted, there have been some large-scale inflation fluctuations over this period, but the compounding effects are no less apparent.

So, while zero returns on your money and higher inflation may seem manageable in the short term, they can have detrimental effects on your money over time.

The Game has Changed

Blindly doing the same thing the previous generation did in the hope of similar results is delusional.

There are people still trying to save more and more money in the bank just so they can afford to pay higher and higher prices, but the prices are going up faster than they can save. Saving 5k a year to buy that house that’s going up 10k a year? Sound familiar?

You need to tie your income to these rising asset prices if you have any hope of escaping the vicious savings loop in the long run.

Unfortunately, this is the reality for our generation. Ignoring it will ensure you are left behind.

What worked for your parents isn’t going to work for you. The onus is on you to create an investment plan that will put your money to work and tie your future wealth to assets that will increase in price over time.

Stop naively putting all your money in the bank, hoping that ‘it will all work out’. It doesn’t work like that anymore.

I have spent the last few weeks writing a guide to creating and managing your own investment portfolio. To receive a copy, sign up for my newsletter by scanning the QR code above or go to www.theislandinvestor.com.

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Massive increase in numbers using local bus services

Passenger numbers on local link buses across Kerry have increased by 1727% from 2020 to 2023 according to local Green Party Candidate for Killarney Diarmaid Griffin. This is the highest […]

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Passenger numbers on local link buses across Kerry have increased by 1727% from 2020 to 2023 according to local Green Party Candidate for Killarney Diarmaid Griffin.

This is the highest increase nationally and is due to the investment by the Department of Transport during this government term.

“This service was lacking in former times, especially in rural areas and is a welcome addition to the countryside and villages of Kerry.’ says Green Party Candidate for Killarney,” said Griffin.

“While in the past, a taxi was the only option for those not cycling or driving. Now a service to Killarney is available every Friday morning from my townland of Barleymount. This is just one example of the network of bus routes criss-crossing the county thanks to local link.”

“This project is a notable success as the figures show. Investment in public transport helps alleviate congestion, increases community cohesion and reduces rural isolation. This is all welcome news for the locality,”

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Two weeks to go to Killarney Musical Society’s production of ‘Michael Collins A Musical Drama’There is less than two weeks to show time for the cast of Killarney Musical Society’s production of ‘Michael Collins A Musical Drama’

Killarney Musical Society held its official launch on Sunday where cast members appeared in full costume ahead of the March 5 – 7 performance at the INEC Arena. The launch was […]

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Killarney Musical Society held its official launch on Sunday where cast members appeared in full costume ahead of the March 5 – 7 performance at the INEC Arena.

The launch was followed by a full rehearsal and director Oliver Hurley was also there to lend a hand.

“We were delighted to introduce our lead characters to you. We had Abbey Theatre players Brigid Delia and Michael, who are the narrators throughout the musical drama. Eamonn De Valera , Harry Boland, Joe Emmett, Arthur Griffith, Cathal Brugha, volunteers and of course the beautiful Kitty Kieran were in full costume,” said KMS PRO Linda O’Donoghue.

“Mother Ireland and her five graceful dancers were fabulous. Our director and choreographer Oliver, our musical director Michael Young and the full cast of 64 were there. The singing was powerful. The music in ‘Michael Collins – A Musical Drama’ is distinctly Irish. People will definitely enjoy it.”

TICKETS
Get your tickets in the INEC box office, online at universe.com or at the pop-up ticket office in the Laurel’s Pub, Market Cross from 12 pm to 4 pm between February 29 and March 2.

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