Inflation is a dreaded part of economics. It is almost second nature, and it happens, regardless of how much we hate it. Inflation is the continuous rise in the prices of goods and services as measured by the consumer price index (CPI) or by gross national product (GNP).
Inflation may happen due to many reasons ranging from having too much money in the system to insecurity. Sometimes, it occurs as a reaction to natural disasters. There are different types of inflation like creeping inflation, walking inflation, running inflation, and hyperinflation. I will discuss this in another post.
Here we want to talk about how you, as an investor, can protect yourself from inflation.
Invest in stock:
Investing in stocks helps to defend you against inflation.
How does this work?
Certain products have a natural tendency to experience a price increase during inflation. Sugar is an example. Investment in such commodities can lead to an increase in the value of shares I invested in. Businesses will sell their goods at increased prices, which will lead to more revenue earnings. This leads to increased stock prices too.
Looking for companies with the best profit margin and low cost of production is also a good strategy during inflation. Dividends help to increase the total returns of a portfolio.
Invest in yourself:
Imagine gaining new skills and how they will make you fit for employment; whether as a freelancer or a direct employee. It increases your earning power and mitigates the effect of inflation. It is a logical approach. Inflation increases your financial output, and investment in self increases income. It is that simple.
Find a good asset management platform:
Investment in high-yielding assets in other countries is also a way of protecting your capital from inflation. It is the essence of Eurobonds. Inflation in the Nigerian economy will not affect investment made in another country. In clear terms, an investment made in other economies is safe from the effects of inflation here.
At Zimvest, we offer the best-curated investment opportunities. We give consideration to what your risk levels are. We also offer investment advice as great as any you can get. Inflation is harsh for consumers, but it is also a good time to take a hard look at the investment outlay and the opportunities it portends. Visit www.zimvest.com.ng to put investment on your palm.