You only have to turn on the TV for five minutes to hear about the biggest economic story in the world – the biggest in decades.
I mean inflation and interest rates...
Last month, the Federal Reserve hiked the federal-funds rate from 4.75% to 5%. Compare that with a year before when the rate was nearly zero. All of this is the Fed trying to keep inflation from running rampant.
But despite all the news on interest rates and inflation, lots of folks have no idea what any of it really means. Even around our office, some people think all this talk of interest rates and inflation is boring.
I'll let you in on a secret...
"Boring" let me open a vineyard and restaurants. "Boring" paid for my houses around the country... It let me travel the world and eat at the best restaurants.
And "boring" sounds pretty good after the three years we've just had.
Boring is just an easy word to throw at something you don't understand. Today, I want to change that.
If you've never understood the Fed, inflation, or interest rates, you will now.
Recently, I sat down with my longtime right-hand man Matt Weinschenk, and we discussed everything you need to know about what inflation and interest rates mean for you, your wallet, and your retirement.
We explained why the situation today is like a "heads I win, tails you lose" for income investors. And we showed a series of investments that could pay you 20% per year, in perpetuity.
Down the line... if things play out the way we're predicting... these investments could be 200%... 300%... maybe 500% higher.
Our critical retirement update will be online for a few more days. So click here to watch it before you miss your chance.
Now, let's get into some of the things you've had on your minds this week. As always, keep sending your comments, questions, and topic suggestions to [email protected]. We read every e-mail.
Q: Thank you for intelligently and continually addressing both health and wealth issues.
I heartily concur with your praise for olive oil. I would add that I seek the latest date of pressing and wonder whether you would add that to your recommended selection criteria.
Finally, although the Mediterranean diet is very good, you seem to promote olive oil's use on potatoes. Potatoes are lectin-filled vegetables that disrupt the lining of the gut. However, sweet potatoes are fine. Do you agree? – D.T.
A: You should look for a press or harvest date on the back of your olive oil bottle. Fresher is better, as the potency of the antioxidants in olive oil gets worse with age. Here in the U.S., producers don't have to include a press or harvest date. If you don't see a date, don't bother buying it.
As for your second question... I've gotten a lot of hate in my inbox for this, but sweet potatoes are healthier than white potatoes.
White potatoes are a great source of fiber and potassium. They contain about 750 mg of potassium... or about 20% of your recommended daily intake.
But sweet potatoes pack even more nutrients. They contain plenty of vitamin A, which we need for eye health and strong immune systems. They also contain around 43 mg of calcium, which is about 3.5% of your daily recommended intake. And white potatoes cause bigger spikes to your blood sugar than sweet potatoes.
So if you're going for a potato to drizzle your olive oil on, eat a sweet potato.
You can also read my breakdown comparing white and sweet potatoes right here.
Q: When you talk about the gains you get reinvesting dividends, do you account for taxes? – P.D.
A: Great question. For readers who don't know, you pay taxes on your dividends each year – whether you're automatically reinvesting them into more shares or keeping the cash. If you own an investment that pays dividends, you'll get a 1099-DIV which will show you how much you've received in dividends. And then you'll include this amount in your income when you file your tax return.
The dividend tax rate varies depending on whether the dividend was qualified or not and your tax bracket, but most folks pay 15%. (That's the tax rate on qualified dividends for single filers earning $41,676 through $459,750.)
Even here in the U.S., there are just too many variables for us to anticipate what everyone's tax liability could be, so we don't try to factor taxes into our gains. It gets even more complicated when you consider that we have readers all over the world.
But it's also why you should legally dodge the tax man by investing in tax-sheltered IRAs or your 401(k).
Whether you reinvest your dividends or not, in a tax-sheltered account, you won't have to pay taxes on them until you start making withdrawals. Those kinds of retirement accounts allow you to compound at the maximum rate and significantly reduce Uncle Sam's cut.
What We're Reading...
- Did you miss it? This is my No. 1 rule for income investing.
- Something different: These 10 cities are the allergy capitals of America.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
April 21, 2023