Thursday, March 10, 2022

March Trade and protection against inflation

I have been saving $2,000 a month for the past two years plus and was able to accumulate $52 K USD.

It was interested in how to protect my portfolio against raging inflation (the UK official inflation in 2022 is 6.7%, actual over 8%, the USA official inflation in 2022 – 7.9%,  actual is over 10%).  From many assets – equities, bonds, real estate, precisions metals, art, etc.… historically the best protection were commodities. 

My current Vanguard branch stopped dealing with retail /personal investors and only deal with professional ones. This means that I can keep my account and top it up but a new fund minimum opening threshold is $ 1 million.  While idea to diversify and invest in commodities fund is still alive, I invested some additional money into one of my existing funds.

I admire some of the EU legislation. For example, I transferred money from GBP to USD to pay for the extra shares.  I thought, at the time, that the exchange rate given by the bank was reasonable.  I bought the USD at 1.3158 , the exchange rate on the day was  between 1.3114 to 1.3187.   According to EU legislation the banks have to report how much money did they make on that transaction.  My bank made 1.5%, so the bank made $1,500 for every $100,000 USD of money transferred.  It made me thinking.

While Europe has the fourth war during the past one hundred years on its territory. Western europeans citizens will pay heavy price for their leaders’ inability to negotiate and make a deal. I actually think they will push economy into a recession with a high inflation.

In the mean time I took some risk and invested some money from my emergency fund.  All together I invested $120 K USD. This covers my target savings rate until end of 2024.  It pushed my cumulative nest egg from $753 K to about $820K, at the time of the trade.   If I could earn inflation adjusted interest of 3%, without further additions I should have $1,500 K by the time I retire. This is today’s money. 


March 2022 Trade and protection against inflation