The accelerating pace of inflation is one of the main economic trends of 2021.

Nigeria’s inflation rate fell for the sixth consecutive month in September amid decelerating food prices, according to the National Bureau of Statistics (NBS). On a month-on-month basis, the headline index increased by 1.15 per cent in September 2021, a 0.13 per cent rate higher than the rate recorded in August 2021 (1.02) per cent.

When inflation happens, it raises prices and lowers purchasing power. Investing during inflation is a way to keep your money intact – without any interest adding to it.

The idea of investment is to keep your assets growing even when the chips are down. If you invest your money in the right instrument, you would not have to worry about high or rising inflation.

At times like this, we recommend the following investment instruments:

Short-Term Bonds

When inflation is high, short-term bonds may not deliver the best return, but the impact on your return will be less severe than with long-term bonds. Short-term bonds also provide more liquidity, and because they mature fast, you can just reinvest the proceeds in higher-yielding bonds.

Cash

Cash is commonly overlooked as an inflation hedge. While cash isn’t a growth asset, it will keep up with inflation in nominal terms if rising short-term interest rates accompany it. With the COVID-19 pandemic proving just how volatile the economy can be, keeping some cash in a high-yield dollars investment or money market account would protect your funds against inflation.

Treasury Inflation-Protected Securities (TIPS)

Some investments have been designed to withstand the effects of inflation. When inflation occurs, one of these techniques for generating wealth is to invest in TIPS. They have the advantage of periodic inflation adjustments, a characteristic that standard fixed-rate bonds lack.

Learn more with Zedcrest Wealth

Zedcrest Wealth has a team of seasoned asset managers with over 40 years of cumulative experience delivering exceptional financial services for investors. To get started or learn more about Zimvest investment products, you can call 0700 020 0220 or email ask@zedcrest.com now. We are looking forward to assisting you in beginning your wealth-building journey.