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Living and Working in Charlestown in Tough Economic Times

With inflation on the rise, how do you live and work comfortably in a great town like Charlestown? Gary Geraci, principal of Geraci Capital Management offers some key advice.

My name is Gary Geraci and I am the principal of Geraci Capital Management, a financial advisory firm located in Charlestown, MA. My firm provides clients with investment management and portfolio advisory services, specializing in top down, tactical asset allocation.  The Company is recognized by The Massachusetts State Securities Board as a Registered Investment Advisor (RIA). If you are looking to establish a relationship with a local advisor and would to discuss/develop an investment plan, I am happy to speak with you and can be reached at 617-242-1025 or by email at gary@geracicapital.com.

Living and working in Charlestown has indeed been a great experience for me.  My favorite aspects include living within walking distance to other parts of the city, proximity to the water, and being a part of one of Boston’s true remaining neighborhood communities.  My wife and two daughters also love the resources the city offers, including the parks and pools, and recently, we discovered and enjoyed an afternoon at the local skating rink.      

It’s hard to believe, but it’s been six years since we bought our house.  The time has flown by and during this time, Charlestown has evolved in so many ways.  The schools have improved markedly. Local crime seems to have been held in check, and in certain instances, even appears to be waning. Major construction projects on the outskirts of Charlestown are now complete, including the big dig, the Zakim Bridge, and the Rose Kennedy Greenway.  Within Charlestown, residential construction projects are cropping up as well as commercial ones, with the newly constructed Spaulding Rehabilitation facility in the Navy Yard, readily coming to mind. City money is being funneled into park upgrades, road repairs, and overall beautification projects.  Since becoming a homeowner and resident, Charlestown’s metamorphosis can best be described as real progress. Although I am biased, I watched with delight and great pride as Chronicle recently ran a special on Charlestown, billing it as one of Boston’s premier neighborhoods. 

I actually now live a block away from the apartment that I use to rent, in the late 1990s with a few friends.  Since then, the changes in Charlestown are even starker. When I reflect upon my post college days in Charlestown and compare them to today, there is one inescapable reality that consistently bothers me; Charlestown has steadily become a more expensive place to live over the past 15 years.  Now, higher prices are absolutely not endemic to Charlestown, or even city living for that matter, but are fast becoming a growing national problem that spares no victim.  Inflation is a monetary phenomenon which is being created byour government and carries unintended consequences that impinge upon living standards of people not just locally, but nationwide.   In terms of the big picture it’s fairly easy to recognize.  For example, aren’t you amazed by the smaller – yet more expensive - box of corn flakes that you buy at the grocery store, or by the consistently rising health care premiums charged on policies that now carry uneconomically high deductibles, or by the sky rocketing cost of tuition, from daycare to post graduate schooling, which in many cases requires boatloads of loans to pay for it?     

But more times than not, because of the creeping and insidious nature of inflation, it’s somewhat harder to discern up close, on a day to day, local level.  I think this is mostly because we become desensitized to it and slowly and begrudgingly grow accustomed to it.  For example, today in Charlestown, the price of a gallon of gasoline is $4.00, a cup of large tea is $4.50, a large sandwich and a drink is $12, and a large pizza with a couple toppings is about $18.  An average 3 bedroom apartment costs about $3,500/ month, and a really nice one, will cost $4,000/month or more to rent.  The reason why gauging inflation can be tricky in the short term is that price movements often occur  gradually and over long periods of time, in fits and starts and with a lag, and rarely move uniformly from ‘a to b to c’.  But if you were to go back in time 15 years when I lived here as a renter, and compare those prices to today’s prices, everything mentioned above would be twice as expensive.   Now that’s sticker shock, but unfortunately it doesn’t end here.

My cable, phone, and electric bills always seem to trend up in price each year.  Not only has the price of natural gas collapsed over the past few years, but there is also plenty of supply and accessibility to it as one of the largest gas processing facilities in the country is located in nearby Everett.  Yet my natural gas bill continues to grind higher despite this. I recently spoke to someone in the tax collectors office and asked why my water bill was skyrocketing.  While higher usage accounted for some of the increase, I did learn that the city was raising costs each year for ‘water management services’, and in our particular case this equated to an approximate 5% increase per year after backing out usage.    The cheaper grocery options once available at Johnny’s Food Master are now a thing of the past and will soon be replaced by the much higher priced offerings of Whole Foods.  In recent months, real estate prices have climbed sharply, and in many cases bidding wars have broken out at closings, making the once comparatively cheap Charlestown real estate market increasingly more expensive.  This is great if you own a place here already, but not a good thing if you have been saving up and want to move here in the future.      

Charlestown, not unlike a lot of communities across America, is becoming a more expensive place to live.  What can you do about it and how do you protect yourself financially?   What I recommend that my clients do is to purchase monetary assets like precious metals or equity claims against these assets like mining stocks.  Overtime, this protects against the loss in purchasing power of the US dollar, which is the culprit behind a steadily increasing cost of living.  Other areas I steer my clients into include commodities, foreign currencies, and inflation indexed bonds.   If it’s the right location and being offered at the right price, farmland or even select real estate can act as a great inflation hedge, but obviously these are very capital intensive investments.  The easiest way to protect oneself against the impact of inflation is to buy gold, either directly or indirectly through an ETF (exchange traded fund) in a brokerage account.  

While I can only offer investment advice to clients, I am happy to assess your particular financial situation and discuss how an inflation hedge strategy may potentially be suitable for you; I can be reached at 617-242-1025 or by email at gary@geracicapital.com.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

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