This year, we’ve all noticed prices rising, whether that’s for a particular service or for the goods that we’re buying. Inflation has increased because of economic factors, mainly the pandemic. If you’re worried that your money is losing value or making a loss due to inflation, there are ways that you can give your money the best possible chance of generating a return. Using an investment research platform can allow you to research where is best to invest your money in this uncertain time. Read on for more information.
What is inflation?
Inflation means an increase in the price of products and services. It can happen for two reasons, the first being ‘demand-pull’ inflation, which means there is a high demand for a good or service, meaning that consumers are willing to pay a high price for it. There is also ‘cost-push’ inflation, which means that supply is restricted but demand is not. We are experiencing inflation on a great scale this year, but why is this happening?
Why are we experiencing inflation?
One of the reasons that we are experiencing prices shooting up is the pandemic. The economy is trying to recover from two years’ worth of struggling, businesses being closed for so long, and having to make that money back by pushing prices up. Lack of workers due to immigration legislation means continuous supply issues, which has not been helped by the implementation of Brexit regulations.
Inflation and Investments
Inflation can mean that the money your money could lose its value in the market, but it’s not all bad news, and there are a few things that you can do to make sure that your investments are keeping up with the current rates of inflation. Choosing investments that will give you a greater return than the rate of inflation means that you can protect yourself from rising prices. Inflation can benefit those that hold stocks and commodities that value rises as inflation takes place. It is also beneficial for anyone with a fixed-rate mortgage.
If you’re looking for ways to beat inflation and reduce the impact on your investments, here are a couple of assets you could choose to help you do this:
- Real assets – These tend to be tangible things with value such as property or land. If you invest in something with value, its worth increases with the price of inflation.
- Variable interest rates – If your investment pays a fixed rate, this means you’re likely to lose money as inflation takes place. Fluctuating interest rates give your money more of a chance to rise with inflation.
How to protect yourself from inflation
Managing the inflation that is taking place this year may seem difficult, however, there are a few things that you could do that will help combat the effect of inflation. Owning real assets is helpful, as well as investing in a home, especially with a fixed-rate mortgage or even a passion asset investing which is an ever-growing type of tangible asset. If you’re buying a house to live in for a few years, the value will most likely increase. Investing in yourself can be one of the best ways to ensure you’re prepared for an unstable future. Investing in education and learning new skills means that you can increase your earning potential.
