You're right about the 5.59% annual rate of compounding increase. So, if you're also right about the 6-8% (inflation/destruction) then we are spinning our wheels (pun intended), and/or going backwards (on a basket buy and hold strategy). Does this mean that the only way to possible beat the system is to enter and exit frequently with an upward bias?
You likely cannot invest your way to financial success. You might TRADE your way... but to keep ahead of inflation, currency destruction, and taxes... you need to make around 20% per year just to keep your buying power "above water"... no easy task. "Inflation, currency debasement and taxation" is government's way of STEALING your wealth right from under your nose. And unfortunately, they have no conscience at all.
Wow! That's pretty sobering. So then, if you had to choose between relying on wage increases to keep up, or trading (performance) improvements, which would you choose? Probably a no-brainer eh?
So maybe this isn't such a bad idea. Is the idea to convert declining dollars into a stable(r) currency? Once converted, would you stay in that currency and trade the local stock market? Trade interest rate differences between global currencies? I guess this is presuming <20% annual is about max expectation (for trading).
If you are of means... you should move your money and enterprise to Hong Kong, Singapore, New Zealand, Australia or Switzerland. If you are a young person with virtually nothing, you should still move to an area of growth and/or freedom...the USA is neither... thanks to ASSHOLES LIKE BUSH AND ODUMBO! (Actually, America's demise began 100 years ago with SHITHEAD presidents like T. Roosevelt, Woodrow Wilson, FDR... and now BUSH and ODUMBO... America is DOOMED). If you're young, ambitions, and capable... GET THE HELL OUT OF THE USA AND SEEK YOUR SUCCESS ELSEWHERE!!!!!
I'm ok with getting out. If i'm elsewhere, i'm fairly certain my income must come from trading because i do not consider myself otherwise employable. Nor am i interested in employment, at least not in the traditional sense. Since i am not of means, it seems i must learn to trade better than 20% annual to make ends meet, either managing money, or trading my own account, or both. There's probably a point, above 20%, where enough OPM seeks out a consistent money manager to supplement a decent pension. That point, if not more, would be my target for research and development. Thanks for the input.
If I were young and single, I'd definitely make my way to Asia. But being not so young and with a family, choices are not so easy. If I don't relocate, the BEST I can hope for is that the US economic/political system somehow manages to not collapse during what's left of my life. Swell, isn't THAT something to wish for?
I like Asia. In the mid-90's i liked the way every dollar i brought to the Philippines seemed to double in buying power. Hmm...Let's say i have an account in the US that trades dollars (trading from Manila) while i periodically peel off a few (less than $10K) and convert them to (P.I.) pesos? Viable long term strategy?
Hard to know about that specifically. However... 1. America is heavily burdened with debt and social obligations.. that's a negative for a young American's future. 2. Economic Power and vitality has historically been with those who "make things an sell them to the world".... even 50 years ago, that was still the USA. Now, it's Chindia, SE Asia and Latin America. Long-Term Strategy.... Asia, YES... America/Europe, NO.
I just checked. For the Philippines, the average annual inflation rate for the last 9 years is 4.88%. Assuming they are fudging the numbers downward (like the U.S.), a dollar-peso exchange might be a wash comparing inflation rates...except for the general extra buying power (100% ?) the dollar has compared to the peso. It's benchmark interest rate (central bank) is holding fairly steady at 4%. I went to a trade show in Manila once where all kinds of Christmas goodies manufactured in the P.I. were marketed to the world. It was exhausting looking at all the variety. And that was just for Christmas goods. I wonder if there's a way i could use this information in the dollar-peso conversion equation. Recently, the P.I. exceeded India for call service centers. Computers & tires are among the fastest growing Filipino exports to the U.S. while semiconductors represent almost 60% of American imports into the Philippines. Hmm...