Tags: food | inflation | higher | costs

Tighter Times Coming to Main Street in 2013

Monday, 05 Nov 2012 07:32 AM

By Sean Hyman

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I’ve often heard those who are misinformed about investing say that investing is too risky. While investing does carry risk, not investing at all carries the most risk.

Why? Inflation is guaranteed to eat up your purchasing power and make you poorer slowly, year after year.

Well, some think they are invested because they have a savings account or money market account or possibly a CD. They seem to like these investments because of their conservative nature and low risks. However, believe it or not, they are in actuality high-risk investments if that’s all they’ve invested in because inflation is sure to gobble up the paltry returns earned by those investments.

It just simply does it at a slower rate than if you’d stuck your money under the mattress … but not much slower.

But it’s now more important than ever for you to learn how to invest your money into stocks, particularly stocks that benefit the most from inflation, which I call commodity-stocks.

These are companies that own natural resources that go up in value as inflation heads higher. A gold-mining company is one example of this, and an oil stock is another example. They own something that is going up in value as prices become inflated. Therefore, their assets go up relative to inflation and their profits aren’t squeezed by rising inflation like that of other companies.

However, 2013 needs to be a year where you learn to invest in stocks period. Why? Inflation is heading higher, particularly food inflation. You see, that’s one of the worst kinds of inflation.

After all, if electronics are surging in price, you don’t have to upgrade your smartphone or laptop necessarily if you don’t want to it then. If gold and silver is soaring, you don’t have to go out and buy a bunch of jewelry then.

However, you have to eat no matter what the prices of food are doing. If the prices are high, you can’t simply say, “Well, I’ll not going eat this week. Instead I’ll wait until next week.” And more importantly, you certainly can’t say this for your kids either.

The bad thing about food inflation is that you just have to suck it up and pay the higher prices to continue to survive, and it eats into your money that would be spent elsewhere on other bills or on things that you simply wanted to purchase.

In other words, when food costs are out of control, it clamps down on any discretionary consumer spending.

Well, how do I know food costs are going up next year? Remember that bad drought that caused the prices of corn, wheat and soybeans to rise? Those wholesale costs are about to cycle through and be passed on to you, the consumer.

In fact, I saw an interview with the vice president of a huge bulk-purchasing firm for restaurants and he said that food prices were already starting to rise and some were about to spike.

For instance, he said that prices of chicken wings would continue to rise next year until they are about 100 percent higher than they were in 2011. Not good for Wing Stop is it?

Bacon is projected to rise around 5 percent. Apples and apple cider are projected to rise 20 to 30 percent this holiday season, and turkey is projected to rise 7 percent, he said.

Whole chickens have already risen 6 percent since April, and chicken breasts are up 5 percent within the same time period.

Eggs are projected to go much higher because of a limited supply of chickens. Cooking oil is expected to jump by 5 percent. Dairy prices will likely rise 5 to 10 percent higher too, he added.

So expect your grocery bill to rise in 2013 and your dining out bill, as well.

But again, there is something you can do to counteract higher prices. Invest in something that keeps pace or even better, outpaces the rise of those goods.

Stocks will do this, particularly commodity-related stocks that benefit from inflation’s rise.

So position your portfolios now because food isn’t going to be cheap next year. I’ve got my Ultimate Wealth Report subscribers positioned for this already. In fact, we’re already beating next year’s inflation projections for food.

But whatever you do, make sure to be ready ahead of time for these rising costs. Don’t get caught off guard like the masses do. They main thing they know to do is to lower their standard of living. But if you position your liquid assets properly and prepare ahead of time, you won’t have to do what they will be forced to do.

About the Author: Sean Hyman
Sean Hyman is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of Ultimate Wealth Report. Discover more by Clicking Here Now.

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