How I stopped feeling anxious about inflation and the stock market

Many are feeling the pinch of rising prices of everything from gas to ice cream. It is difficult not to get affected or feel anxious over one’s finances and the economic downturn in the coming years as an effect of high inflation.

According to Cleveland Federal Reserve Bank, inflation won’t fall to 2% for 2 years. It is at 8.26% as of this writing. At its height at the end of June, it was 9.06%. The highest level in 40 years.

But I want to reassure you of something:

If you have a plan there is nothing to worry about.

In a survey conducted by Northwestern Mutual, people who work with an advisor and those who are disciplined planners say they sleep better and are happier vs those who do not work with an advisor or who are nonplanners.

If you have a plan or more in place, and you stay the course, stay focused and disciplined, live within your means, and make prudent decisions, you can ride the storm.

I grew up in the Philippines, where storms (called hurricanes here) are a common occurrence. Our home was made of reinforced cement bricks and that gave my family reassurance and protection from the high winds and heavy rains. If you have a strong foundation, nothing can hurt you. The same goes for your financial house.

What does a solid financial foundation look like?

1. Liquidity and accessibility without big penalties
2. Safety from market downturns
3. Tax-favored rate of returns that beat inflation

Most of your money should be in assets that check off all 3.
If not, or if you currently don’t have a plan, I want to share with you a strategy that does and can solve the concerns that people are worried about right now: inflation, taxes, and volatility.

I learned about it after the market crash of 2008. Like many, I had lost a lot of money from my investments. To top it off, my home was underwater (I owed more than it was worth). I had no money saved, so if something happened and my husband or I lost our income, we would end up bankrupt or foreclosed on our home. I’d heard stories of honest hard-working individuals who by a stroke of luck had lost everything they had – their home, their retirement, their hopes and dreams due to a catastrophic event like the loss of a job, illness, death, divorce, etc.

I was anxious and afraid. In fact, I was not sleeping well at night.
Our retirement nest egg was in traditional investments that depended on the stock market and could lose any time.
How can anyone possibly retire securely on traditional retirement vehicles? I realized that nobody can, despite what common advice said.

They say, “You can gain it back when the market recovers. What goes down goes back up.”

I followed their advice for many years but I was not ahead. I was just back to where I was if not less. It took 7 years to recover from the 2008 market. That’s 7 years lost. They call it the lost decade.

And when it’s time for me to retire, I have to pay taxes on all of the money I contributed and the money I gained. Taxes are not something I can control. Depending on who is in office, it may be in favor of me or not. I’d rather take care of taxes now while I have the ability to work and while they’re historically lower than pay them later when I can no longer work and can potentially be higher.

So I asked, “Wouldn’t it make more sense to save most of my nest egg in a tax-free vehicle, which is guaranteed NOT to lose?”
That’s exactly what I did.

I opened an IUL, an Indexed Universal Life.

The IUL checks off all 3: liquidity, safety, and tax-favorable rate of returns that beat inflation.

It also has immediate death and living benefits for the unexpected.

I learned that banks and many big corporations have this vehicle, and it has helped them through tough times and even kept them from going under.

Companies like Starbucks, Walt Disney, Comcast, AT&T, CVS, J&J, and many more. Banks like Bank of America, Wells Fargo, JPMorgan Chase, and US Bank. They’re on to something!

But the good news is the IUL is not just for the affluent.
Since opening an IUL, I do not feel anxious anymore. It gave me financial security and the freedom to do the things I wanted to do like investing in real estate.
My fear of market downturns and market volatility is gone. Whatever I gain is no longer at risk of loss.

I eliminated my risk. It’s a beautiful thing not to be affected when a market crisis happens.
Taxes are no longer a concern because my gains are not going to be taxed.
And since it has beaten inflation year after year, even this sudden surge of inflation is not a problem over the long term.

Structured properly, the IUL can do many things: create a 100% income tax-free retirement and legacy and minimize your costs.

Speaking of costs, many say an IUL is expensive, but it really isn’t. In fact, mutual fund costs are even higher and can eat away at your returns. Higher fees would generate more than $980 million in additional fees in 1 year and a $45 billion reduction in savings over 25 years!

What should you do if you have a 401k or mutual fund IRA or Roth?

1. You may be able to move it into a similar vehicle to eliminate your fees and market risk. Contact me for more information.
2. You can open an IUL and direct your future retirement savings to it so you can build a tax-free asset. This way,, not all your nest egg is taxable. You will be diversified.

Unlike a 401k or IRA, there is no limit to how much you can save in it and how many IULs you can have,
The best thing about it is when the market is bad like it is now, you can sleep well at night.

If you already own an IUL, congratulations! Remember that you need to reallocate and review it at least once a year so you are maximizing the compounding growth of your money. That is why I invite you to do a review with me.

*Do you know that my Dignity Plan focuses on 3 often forgotten, but super important areas: The 3 L’s: Longevity, Long Term Care, and Legacy? Having a Dignity Plan can help you sleep better, and stop feeling anxious. Schedule a time to set up your Dignity Plan here.

**Have you recently had a DBMDR (Death, Birth, Marriage, Divorce, or Retirement) and need help getting your financial plan in order? Schedule a meeting with me.

Sheilla Vidal is a Retirement Income Certified Professional RICP® and life insurance broker. Sheilla is also a physical therapist, wife, mother of two, and one of the caregivers for her 85-year-old father. She is an avid learner.  She writes, speaks, and recognizes that her work in helping clients live with dignity is her God-given mission.