Welcome to Dynamic Wealth Management

Welcome to Dynamic Wealth Management's brand new website.  Please take a look around and take a moment to read the blog.  I will be posting my thoughts on investing and the markets every Monday, so check back every week to get the latest news.


Subscribe to the Newsletter

Receive HTML?

Customer Login

Why I Love High Gas Prices and Why You Should Too! PDF Print E-mail
Written by Kalson Jang   
Monday, 04 April 2011 22:28

Of all the things we complain about, I think nothing tops the list more than complaining about the price of gas.  I think people complain about the price of gas the most because it is something they absolutely must pay for, and they have very limited options when it comes to the price they pay.

Gas, like everything else, has gone up in price for as long as we can remember.  Like I’ve mentioned in many of my previous articles, it’s a product of inflation.  Every major economic region is printing money in an effort to spend their way out of trouble and to lower the value of their currency.  By printing more money, there is more liquidity (i.e. more money to be spent), which leads to more purchases, which leads to more jobs being created, which leads to more people having money to spend, which increases an economic regions prosperity.  Printing more money also lowers the value of their currency which makes their exported goods more favorably priced for other countries which leads to more exports and thus more jobs being created domestically.  Although this all sounds great, printing all this money also leads to inflation; we see this inflation every day of our lives.  When we wake up in the morning and buy our coffee, we notice the price of coffee has gone up.  When we fill our cars with gas or pay for public transit, we see that the cost has gone up.  When we buy lunch and dinner at a restaurant, we see that the cost of food on the menu has increased.  If we decide to save money by eating at home, we see that our grocery bills have gone up significantly.  When we get our utility bills in the mail, we notice that the cost to heat our house and use water has gone up significantly as well.  We all notice this because it is something that affects everyone; and although it seems at times like there is nothing we can do about it, this could not be further from the truth.

As someone who makes a living by helping people turn their money into even more money through investing, I enjoy seeing the price of gas go up because it means that my investments are going up even more.  When everyone else is complaining about how gas companies are cheating us with ridiculously high gas prices, I look at my investment account and see my account value increasing by leaps and bounds.

To illustrate what I’m talking about, let’s consider the increase in gas prices over the past 2+ years:

End of 2008 - $0.75/L
End of 2009 - $1.00/L
End of 2010 - $1.13/L
Today - $1.30/L

I’m sure you are reading this and cursing the gas companies at the same time for the 73% increase in gas prices over the last 2-years and 4-months, but I’m here to change that viewpoint.

If you were invested into a quality Energy Mutual Fund during that time, you would have made 88% during the exact same time period; 15% more than the increase in the price of gas!  If you invested $5,000 into this fund, an increase of 88% would equal $4,400 in profits! This would be enough profit to buy 4,400 L of gas during that time which would be enough gas to drive approximately 50,000 kms!

In other words, putting $5,000 to work for you would have provided you almost 2.5 years of free gas.  At the end, you would still have your $5,000 to use as you wish.

If you had your money invested into a GIC during that same time period, you would’ve probably made $230 during that same time period instead of $4,400 (19x more profit).  That is why it’s very important to be fully invested in the markets instead of putting your money into a GIC.  Even though a GIC is guaranteed not to lose you any money, your loss of purchasing power can be significant and just as painful.  As you have seen with your very own eyes, the prices you paid 2-years ago are a distant memory compared to what you pay now and $1 in 2011 doesn’t go nearly as far as it did in 2009.

So the next time you see gas prices going up, ask yourself, would you rather complain about it or would you rather do something about it so that you can benefit from it?

Kalson Jang
Phone: 416-775-8777
E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Note: Performance figures and calculations used in this article are for illustration purposes only and past performance may or may not reflect future performance.