COLI - is it the Real Thing?

ABOUT THIS EPISODE

COLI is the Cost Of Living Index. It's related to inflation and is an indicator of how much it costs to live in different places. It's important to understand how this affects your life and your investment portfolio. John asks a great question, "What is your personal inflation rate?" 

Welcome to the build your life podcast with John Browning. Build your life as a relaxed and unedited conversation with financial expert and number one Amazon bestselling author, John Browning Jones, the founder of Guardian Rock Wealth and serves clients across the United States. John's the author of the book build a life, not a portfolio, a guide to your financial future based on your personal values, which you can purchase on Amazon, or stay around to the end of today's show and I'll tell you how to get a free copy mailed right to your door. I'm Michael The lawn, your host for the next few minutes as we chat with financial expert and business owner John Brownie. Well, John Browning, welcome back to your podcast this week. How are you today? I'm doing fantastic. It's a great day. I love it. That's a great answer. It is a great day. I brought with me a drink and it's a as a generic drink. It's a hundred percent natural cells or I like...

...carbonated water and this one is flavored and most people think I'm weird, but I like it. But I grew up John I. Well, I know I am, but I grew up during the cola wars. Remember the Cola Wars? M Yeah, and we probably all remember those and all the blind taste tests and all that. So well, we all know what a Cola is if I asked for that. But we're not going to talk about colas today. Were soft drinks, but we're going to talk about something very similar called a Kali, and a lot of people don't know what that is, because when I mentioned that to them, they're like, what is a Collie? Did you misspronounce it? No, no, a Kali. Well, I'll let you explain it, because you're the you're the expert on this podcast, and tell us what a Kolie is. Well, this is what and we touched on this and some other episode of the podcasting. This is your Coss of living index. Okay, Boli, okay, it's it's really related to inflation, which we have heard a lot about recently. Okay, really...

...since cold we've kind of gone through the covid the pandemic, and then the the time period after that, a lot of a lot of folks, a lot of businesses, ordering a lot of supplies, kind of like Oh, we're free after the pandemic. So what what does that mean for inflation. There's a large amount of demand that not as much supply. Why hasn't caught up yet? So there's some debate as to whether, you know, is inflation really as high as it seems? Because currently, I think the most recent months shows it inflation, which is measured by CPI, which is the consumer price index that the government uses. When you can find that, if you go out to the BLS, the Bureau of Labor Statistics, dot go,...

I believe, website, you can find all this information that out here that I'll share with you, but I believe it's about five percent right now. Okay, so and that's inflation. That's inflation and that really re reverts back to that cost of living. What does it cost to live? For for you, for for me? Okay, so case some point. All right, so my son, my eldest son, and his wife live in Camario, California. I live in Little Rock, Arkansas. The cost of livings a little different, right that? So there's an index out there that says what a gallon of milk in Arkansas is a dollar thirty two and I gallant of milk in California's four dollars in eighty two dents. Or something like that right, is that kind of what is for us lay people and that that's right and that's and by the way, having lived in Hawaii, I can tell you a gall in the milk is closer to six dollars. That's like a dollar a pound man. Yeah, yeah, it's it's painful and...

...in Hawaii, but the weather maybe and the scenery maybe, maybe it's worth yeah, good offset. So coolie is so. So you need to know the cost of live. An index that's tied to inflation, and inflation is how how much spending power my dollar has is, I mean, how do you write? And how much is it rising over time? And and as we look at there's a there's a big debate out there right now. Are we going to see deflation? Some people think that and other people say all this is massive inflation that we're seeing right now. What are you talking about, you deflationary people? What are you talking about? And I think there's there's two interesting aspects of this that most on either far side of either argument. I always say, always seem to find the right answer somewhhere in the...

...middle of the two sides. Right. So, first of all, the bond market. Those guys are really smart. There's trillions of trillions of dollars flowing around out there. There's more mark there's more money in the bond market, a lot more money in the bottom market than there is in the equity market, and those guys kind of know what they're doing. Over, if you look back over decades and decades and if you look at where the ten year treasure yield is now, it's still very low, and that means that the bond the guys, those really smart guys, are saying that inflation is really not so much of a problem. Look at that and I put a lot of weight on that. So those guys have been right for a long time and consistently. And the other argument for deflation is the this idea that we have so much innovation coming online and it's dropping those costs so fast that it's actually going to lower the price of, say, your car that you're...

...driving in and all that. Now here's the big issue, though, depending on who you are and where you are in life, and not to mention where you are with the costploading at dext but for say, an older person, as we age, we tend to have higher medical expenses. Well, the cost of medical care. That inflation has traditionally been significantly higher than the overall inflation. So older people may have a different inflation index. In other words, when you retire and you're trying to play in your budget how much you're going to spend, it might be significantly higher than you're thinking because a bigger portion of your income is going to go towards medical expenses, with our gaining at a faster rate. Okay, so they're in exploding. One of the myths that we've all grown up with is that when I retire I need...

...less money than when I'm working. The exactly exactly. Just to give you a couple of statistics on that, over the last five years, healthcare inflation that has moved higher on average by two point four seven percent. Well, overall inflation was up two point one percent, which doesn't seem like a lot, but when you compound that over the years, it becomes significant. Yeah, so I'm all right. So, and this is why people need to just talk to you, John, as you're making my brain hurt. So you've got to understand, or let's understand, the cost of living index at some level, but then you add on top of that or next to it, or connect the dots of inflation and how that's going to help or hurt my buying power today, tomorrow, the next year, and look down the road a little bit. Say, okay, compounding that, what's it going to look like in the future, because our medical costs going to go up or down in the future? Well, my guess is up. I don't...

...know, but I need to be planning for that now so that I can be ready then. Exactly. And what's your person really consider? What your personal inflation is going to be like too? Yeah, because in some ways, if have you ever heard of a regressive tax? Have you ever heard of that? No, so, a regressive taxes, when governments or municipal these tax things like who so necessary items, no matter where you are on the income scale. Okay, because it hurts disproportionately lower income people, and these things that the argument is they're going to actually decrease in costs, like your tests are actually going to be cheaper to drive, cheaper to own, cheaper to operate, so they say, and it looks like that's the case so far. Then your your older vehicles. Well, somebody with a lower...

...income not going to be able to afford that brand new tesla, but arguably it would be cheaper for them if they could afford it. Kind of a trap your mind around. But this in this inflation versus deflation, is really kind of a regressive tax on the middle and lower income individuals. HMM, that's another thing to consider. You, what is your personal inflation looking like as opposed to just what they published in the news and talk about, which is the CPI? Okay, right, a great question. Yeah, because I've never thought about it. Of what is your personal inflation? Right, is that kind of would that be the right question? That's right. Yeah, exactly. Huh, I've never thought about that. I've always just thought have been plactions around the you know, as a macrow thing, not a micro thing. Right, it can, and this is this is why it's...

...like it becomes what I call the complex adaptive system. Right, it's not complicated and that there's an answer to it. It's complex. There's so many different I usually go into this and we did a whole podcast on the complex adaptive system that you can go back and find, because it was really complex. But you made it sound so simple. But Cola not call a Kali cost of living index, is a number that we can find online, probably m yeah, inflation, right, we can find online. But to really really understand it, we need to just reach out to John Browning, because you understand the stuff and and it's just part of the whole investment portfolio that you helped your clients do when you when you're working with him, because you have that relationship to know where they are in life and what they're wanting to do in life and how how this. I mean, this is really fascinating topic, because it's not most people think of an investor in advisor, advisor like you, a financial advisor, dealing with stocks and bonds and mutual funds...

...and in all that stuff. I don't know that I've ever factored in cost of living index and inflation into that whole picture. So that's very fascinating. But that's what you do. Yep, that's what I do. Every day. I think about all that cool stuff. Yeah, okay, maybe it's not that cool. Cool all stuff. Yeah, you just definitely got the Gee cat for today. I'm so grateful to God for you, John Running, and people like you, because that would drive me Battie to try to understand how that. But you love it, and that's why people need to reach out to you and have discussions. This is not a one time I mean, that's the thing on they're going to reach out to you, John, is not a sales call. You're not going to ask them to shout on the dot of line. You're going to have conversations and see if there's a fit, see if you can help people, because you don't. That's the thing. You don't give any financial advice until you have a client relationship, and that that's not going to come on the first call. That's going to come through a series of conversations and your five wise and all those other fun things to build the relationship with that person so that you can help them...

...build a life, not just a portfolio, which is the title of Your Amazon Best Selling Book. By the way, people can ask you for a copy of that, that's right, which is really intriguing. It's very good book. But yeah, just reach out to John the Coolie, ask him about the Coolie wars and see where he goes there and and maybe you will have a picture of one of those star wars things. That's kind of fun. That's right. Should yeah, that would be fun. But cost of living inflation and where is it going and how does it affect you personally? Well, who knows? Well, John Brownie knows. So let me encourage you. Just reach out. Guardian rockwealthcom is how you can get ahold of John and listen to this podcast again. were out to hand, schedule appointment, just have a conversation and you'll be amazed at what he knows and how he can help you build a life, not just a portfolio. Johnny. Any last parting cots comments on Coolie or inflation or anything else. Well,...

...just remember as you're as you're thinking through these things, that inflation and cost of living are real items that are kind of like a silent tax on your earnings. And if you are living scared, is what I call it, and you're you're hoarding cash because you're so afraid of the politics the world, the situation and all that, just realize that you are likely losing money, almost certainly losing purchasing power on the dollars that you're holding in your bank that you consider your safe assets. So just be careful how much of that cash. It can make a significant difference in as you build your life. That's the way you're being able to do. That's great. Well, do the whole episode on that. I've got some ideas around that, but we'll talk about that on another episode. This has been fascinating talking about coli and inflation.

It's been very helpful to me help me understand a few things of John Browning, Guardian Rock wealthcom. Thank you so much again for a great episode. All right, we'll see you next week. Money really is a big part of our lives and John Browning can help you and your family learn how to keep money in the proper perspective. It's important, but it's only a tool that can help you build the life that you want. If you like, John Emeill you a free copy of his book build a life, not a portfolio. Go to John's website, Guardian Rock wealthcom, and click the contact to US link and send your request. John Will Mell a copy of his book right to your door absolutely free. Thanks for listening to building your life podcast with John Browning. Be Sure to subscribe to this podcast so each new episode will be sent to you automagically when it's released. Have a terrific day. Nothing in this podcast should be construed as personal investment advice, and...

...past performance is no guarantee of future results. Investing is not appropriate for everyone. There is a risk of loss associated with investing in the markets. No representation or implication is being made that using any methodology or system will generate profits or insure freedom from losses. Please remember that investing carries risk. Guardian Rock Wealth LLC and it's affiliates are fiduciary investment advisors. Please consult with US or another experienced qualified investment advisor before making any investment decisions and or trying to implement any of the strategies and tactics we may discuss in any of our publications or podcasts.

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