The S&P 500 closed the week at another record high, posting its best weekly performance since February, as investors came to realize that higher inflation is a given as the economy continues to push out of the pandemic. Fifteen months after the US first plunged into lockdown, the economy is well on its way to a complete reopening. Spending is up, businesses are rehiring, and Americans are slowly returning to work. Economists largely agree that economic output will grow at the fastest rate since the 1980s this year.

While there are various theories on the lasting effects of the pandemic, a few things may stay the same for the next few years, well after we get back to normal – work from home, service jobs will remain depressed and the housing market will continue to climb.

Future Wealth’s View

The sobering reality with climbing inflation is that parking money in a checking or saving account at their local bank means one is actually losing money every day. Yet, the banks are seeing massive inflows of money into money market funds. Between late March and May, they rose by $411 billion to $17.09 trillion, nearly four times the average of the past 20 years. Normally, this would be good for banks as long as they can use the money to make loans. But bank lending has been slow as many companies prefer to borrow money from investors.

Which brings us back to the title of the article – Buy stocks. With the pandemic, the major reason for the uncertainty in markets behind us, we believe that the second half of 2021 will begin to see unprecedented growth in the global economy. The stock market will follow. There is simply no reason for depositing savings into a bank account. Don’t be one of them.