If you do not have a solid grasp of what is happening in the world at the moment then it is very likely you are becoming poorer, and this process is only set to accelerate.
“Things” have been getting more and more expensive in terms of most of the paper currencies on the planet, which means that unless your salary is going up by at least as much or you’re making money from investing, in reality, you are getting poorer every day.
Any money you have is gradually being destroyed. If you have any savings in the bank you are losing real wealth every day, and losing more than you think. This is one of the many reasons people are feeling poorer without really understanding why.
With very few exceptions (Norway and Australia, for example), wherever you live in the world today you absolutely cannot count on being able to live on handouts from your government for the rest of your life when you stop working.
The average British adult has about £30,000 saved by retirement (or less than £10,000 for women and just over £50,000 for men).
If you want to have a pension income equivalent to the average British salary of roughly £27,000 per year you will need to have saved up a pension pot of around £675,000 when you retire rather than the £30,000 which is the current UK average as mentioned above.
According to the “efficient market hypothesis” (EMH), no one can outperform the stock market by choosing the right investments.
However, according to Craig, there is a vast amount of evidence and academic work demonstrating that the theory simply doesn’t hold up.
The main reason that the EMH doesn’t work in reality (and why you can hope to make great returns on your money) has to do with human nature and the existence of what is called “asymmetric information”.
There are three particularly dubious ways in which governments ensure that inflation numbers end up always being lower than the true increase in your cost of living (so you think you are wealthier than you actually are and they get to pay out less in social security, given this is linked to the “official” inflation numbers): Substitution, Geometric weighting, Hedonic adjustment.
Another source of the “hidden inflation” that doesn’t make it into the official numbers is sometimes called “ghostflation” or “shrinkflation”.