Hey Everyone! I need a little help. Last week, I received a question about inflation spending. Basically, the reader asked if there is anything we should buy ahead of time to head off future inflation. I did some research and only came up with a few things. Okay, here is the question (edited for clarity) and I’ll share my thoughts after.

My wife and I thought of an idea to buy things early that could help avoid future inflation. For example, we bought new bed sheets and left them unopened. Imagine you want new bed sheets every 5 years. If you expect to live another 50 years, you could buy 10 sets of bed sheets and you’re set for life! Obviously, we can’t buy everything – especially food.

Question / topic for a blog: What are the things we could buy now to help avoid future inflation?  The one big item is a house. We bought our “forever” home when we thought of this idea and that will likely turn out to be a fantastic idea. What else though? Are there things we could buy now that we will want in our 50s, 60s and beyond? What things are easy to store and don’t take up much room? Have you ever thought about this?

Whoa, that’s a tough question for me because I dislike spending money. The obvious answer is a house. If you purchased a home before 2021, you locked in a great interest rate and probably a pretty good price. Many homeowners refinanced and got a great rate as well. Those locked-in rates are lower than inflation today. That’s free money! I don’t think there is any purchase that comes near this fantastic value. But, I thought long and hard and came up with a few things to spend money on.

That’s all I’ve got. Do you have any suggestions?

Buying ahead is tough for me because of our mindset. We are trying to be more minimalist and I dislike spending money. Buying more things is contrary to our goal. I just don’t believe in spending unnecessarily. We buy what we need and don’t plan beyond 5 years. It’s a problem for us in several ways.

Generally, high inflation causes people to downgrade their purchases. Consumers tend to buy cheaper stuff so their spending doesn’t increase as much as the CPI. Buying ahead could also alleviate price inflation. However, there is the opportunity cost. Usually, it’s better to invest than to stock up on consumer goods. Investment is appreciating assets and it will help offset inflation and build wealth. Consumer goods are depreciating assets.

The world is changing though. Globalization is reversing due to Covid, war, geopolitical issues, and supply chain issues. Inflation might be with us for many years to come. Maybe it’ll be the right choice to buy a few key things now instead of waiting.

In conclusion, this buy-ahead strategy isn’t right for us. But it might be good for you. What do think? What can we stock up on to avoid future inflation?

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Bikes. Or anything that benefits your health. But I’m biased 🙂

And I also will continue to spend on VTSAX

Yeah, now everything is getting more expensive, especially houses and cars. If I had extra money, I would definitely keep buying more index funds. This is probably a better way to beat inflation than buying material stuff.

Items that don’t depreciate over time would be worth buying. For example, a good set of quality tools will last a lifetime. Heck, I still use some of the tools my father gave me as a child. They still work perfectly today.

I don’t know what he paid back then, but it had to be less than today.

Items that depreciate quickly (cars, electronics, furniture, etc) would probably be a bad idea to stock up on.

Oh yeah, tools. Those are good buys.

we fixed up our attic/art studio about 5-6 years ago. when it was done we wondered why we hadn’t done it sooner as we had the money set aside for about 10 years it seems. it was such a a life enhancement plus we got energy savings from insulating too.

that being said i don’t think i would buy too much ahead just because of inflation. like you said, joe, we don’t really love spending money either. i think we’ll just carry on the way we have for many years replacing items as necessary.

We want to remodel our kitchen and will try to do it next summer. I’m not looking forward to it, though. Remodeling always take so much time.

Take it easy folks, Fed is battling inflation big time.

I think it’ll take a while for inflation to come down. Investors are still too optimistic, IMO.

imagine if they were pessimist

It’s hard to predict inflation, and to predict how inflation is going to affect the opportunity cost of that money you’re storing in sheets you’re not using. If inflation is 5% and the stock market is 7%… maybe you’re still better off buying the sheets when you need them. It’s just hard to know when the stock market is going to be 7% vs. -2%. What is Russia going to do? What is the Federal Reserve going to do? If you’re a member of congress you can get your spouse to take advantage of your crystal ball (which should be illegal but isn’t), but for the rest of us…

With the exception of obvious things like locking in a 30 year mortgage back when they were at historic lows (too late now! also, we didn’t do it because we’d already paid off our mortgage and didn’t want a new house) trying to time inflation is like trying to time markets.

That’s what I think too. It’s easier to just invest because things will revert to the mean at some point.

Solar panels is a big one. It can depend on your area and subsidies (which may be very good soon if not already).

We went solar in 2015 and paid 16k for almost all our energy needs for the next 25 years. We essentially locked in electricity at $0.06/kWh and it was over 20 cents in Rhode Island. Electricity rates will be near 30 cents when October’s “winter rates” kick in.

Bonus: Combine it with an electric car and lower you transportation costs.

Yes! I was coming here to say this….Solar Panels + Heat Pump for heating and cooling. Electric utility rates continue to climb, and the price of oil is volatile. I use heating oil to heat my home in winter, and prices were as high as $6 a gallon this year, when I paid as low as $1.50 a gallon a few years back. Because my heating/cooling equipment (furnace & A/C condenser) was at or near end of useful life, a decision needed to be made and for me that decision was heat pump technology for heating, cooling, and hot water. A $20k investment that should pay back within 3-4 years at the current price of oil.

Wow, that’s a big increase in heating oil prices. Our furnace uses natural gas and the price increased a bit. I’ll look in to a heatpump. We need the AC anyway. Currently, we don’t have AC.

Yes solar power and the heatpump that DTS mentioned too potentially good options.

If your houe needs weather sealing and insulation thats likely the best place to start.

Home energy efficiency in general is a good area to look at. Id’ first start with an evaluation of your home. This will tell you what your house needs and where to start. I got an evaluation for I think around $100. Someone comes to your house and sets up a big fan in the doorway so they can measure the air going in / out and tehn they look for air leaks and hot spots.

And definitely check if the local utility has deals with rebates or if your state has tax incentives.

Solar panels are good until there’s a leak in the roof. And then you would have to uninstall and reinstall everything. Those costs add up real fast, my friends.

Better idea to do it only when putting on a brand new roof (though even new roofs can leak). Or go with a ground-level system.

https://www.thesolarnerd.com/blog/do-solar-panels-cause-roof-leaks/

Solar panels should not be installed on an old roof. The age of the roof is one of the first things I was asked when they quoted me installation of panels. Of course poor installation can cause problems, but thats true about everyhing.

This is a great idea! Although, it might now work that well for us. Our electricity price isn’t too high. According to the estimate, we might save $2,000 after 20 years. That’s not worth the $16,000 upfront cost, IMO. Also, we don’t plan to live here forever. Also, we can’t charge an electric car because we don’t have a garage. 🙁

yeah, solar payback is long and not a very high ROI just looking at 20 year.

What estimate are you looking at ? The generic calculator at Project Sunroof I’m aware of uses a relatively low inflation rate of 2.2% based on previous trends and the context here is a high inflation environment. Also I don’t think they hae updated tax incentives. Fed rate is back up to 30% ad theres an Oregon incentive too.

I haven’t considered buying ahead exactly for the reasons you mentioned. I do keep my home stocked with a good supply of food and other consumables so we don’t run out and have something for emergencies but it’s easy to go overboard. I still have some pinto beans from my prepandemic run though stores to stock up….

I think we ate through our pandemic supply. I need to check, though. We probably should replace them with new cans.

The best thing you could stock up on now:

Anything your family really enjoys could easily be bought by the case now…prices are literally doubling, but some items can still be found for less. (I also like Amazon Warehouse for discount prices on these.) I’ve stocked up on corned beef hash and beef stew (2 brands we especially like) canned and jarred mandarin oranges and peaches…and sardines in mustard sauce. (For me, but Husband is starting to enjoy them, too.) Canned chicken, corned beef, crabmeat…these work, too, for soups, stews and casseroles. I also bought extras of Marie Callender chicken potpies (wonderful) and our favorite pizza. You’ll have to do some research to find the best prices — but even a few extra will be helpful in your pantry. Can you double your money in investments this quickly? Naaah…but you can, stocking up on frozen and canned goods.

That’s a good idea too. I’ll see what I can find at our store. I need to cut out processed food due to health reasons. We’ll do some research and see what we can use.

Ah, I thought about this one deeply already. Rare books and other memorabilia with autographs!

The pandemic limited in person events, which limited the supply of rare books with autographs. Hence, I will be buying these hard assets over the years for enjoyment and future profit.

I found some of my ancient Chinese coins that I purchased in 1997 in the British museum! Surely, they are worth a lot of money now to be behind bulletproof glass encasements.

That’s a neat idea. You can spend on something you like and it’ll be a form of investment. That’s a good way to spend if you are a collector. I’m more of a minimalist, though. Also, I don’t want to store valuable stuff at home. I don’t trust our neighborhood…

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