Inflation: Your Portfolio's Silent Killer

Last week I made four presentations at the Las Vegas Money Show. The big question on most investors' minds is how to play inflation. According to the U.S. Department of Labor, inflation ran at a meager 1.5% for all of 2010.

Most of us find that report questionable, given what we experience every time we fill up the car or take a trip to the grocery store. If you exclude housing's impact on the formula (most of us don't buy a new house every year) the real inflation rate was closer to 8%. Of course the federal government has tweaked the CPI (Consumer Price Index) calculation method to use the reality of falling home prices to hide the reality of big jumps in the cost of food, healthcare and gasoline.

Given that most banks are paying interest on savings at a rate below 1%, this means over the next 10 years a $100,000 CD could lose 70% of its purchasing power. Many stock and bond portfolios may not fare much better.

What is an investor to do?

Let's recognize for starters that we cannot depend on the government to get this problem under control and so we will have to take matters into our own hands. Knowing this issue exists could be the most important realization you make this decade. Given that sobering realization as our starting point, we have only two solutions to this mess.

First we need to increase the growth rate of our savings. Second, our stocks must grow faster than inflation. My private clients have had an amazing amount of success in this area using dividend paying stocks that are uniquely positioned to benefit from inflation. As every dividend investor knows, it does no good to earn a high dividend if the stock that pays the dividend plummets in price. So the important thing is to get BOTH a high yield and price growth.

The problem is that searching for stocks that can both pay a high yield, AND grow faster than inflation is not an easy task. Currently I am averaging 7 to 9% annual dividend yields not counting the additional growth in the underlying stocks of up to 20% annually. Want to do the same for yourself? There are very specific "telltale signs" that reveal the right candidates for this type of investment and these "telltale signs" can be learned with a bit of specialized training. The good news is there are occasional opportunities for you to get this specialized training on how to find these treasures.

If you want my system for finding dividend winners, I will be covering the exact selection methods I use to find these types of dividend paying portfolio winners at our June 2011 live event in Houston. To get in on the secrets, contact Kelley in my office at 888-853-1456. Space is very limited.

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What Most Investors Want Right Now A recent in-depth survey of a group of investors hurt in the 2008 stock market meltdown revealed three necessary characteristics of stocks that would get them back in the market. To see what those characteristics are, and to discover how we found the exact stocks that met all criteria (and produced an overall return of 62% the next year), click HERE!

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