There are many things that scare people. Ghosts, clowns, the thought that everyone around you secretly dislikes you and is actually actively conspiring to make your life worse, inflation and other things. But let's talk about inflation for a second because everyone in the news likes to talk about how it's the end of the world. And also that weird uncle who says inflation is why you should invest in Doge. Elon Mars talking about how it's going to the moon. And it's definitely not a rug poll, but like inflation doesn't have to be bad. In fact, inflation is good. Economists and financial leaders actually want there to be about 2 to 3% inflation each year. In a healthy economy, lower inflation rates, but rates above 0 actually work to encourage business growth in the economy. Inflation becomes a problem when it runs out of control and devalues everyone's money. But like, how can you take high inflation rates? Often thought to be a major downer and turn them into a money making opportunity, well, in periods of high inflation, wealth is generally transferred from lender to borrower when taking out loans, or in other scenarios. Explained more simply, if you take out a loan at a rate less than the inflation rate, say 3% when inflation is 6%, over time you'll actually end up paying out less money than if you would have bought with cash up front, even with that interest rate. All thanks to inflation devaluing the money overtime. This won't necessarily make you rich or even make you much money, but it does help inflation look a little better and on a very large scale can be a big winner. But there are actual ways to make money with inflation. Inflation devalues money, so you have to counteract it. You need something that grows in cost faster than inflation devalues the money. There are a few things that do this. Real estate, commodities. Stocks, hard assets, and other things that hold value separate from just money, real estate and hard assets like collectibles, some cars, etc are great options in periods of high inflation because these asset classes go up in value usually at at least the pace of inflation, but generally more. This means that if you didn't spend 100K on that bit of land, your money would slowly start becoming less and less valuable sitting in a bank, but buying the land allows that investment to grow to 105, 110 and keep on going.
Tangible assets and investments are great options for your cash during high inflation because their value will generally grow along with the inflation rate. As inflation devalues money, it takes more money to buy those assets down the line, so the owners of those assets make out great and the people that left their money in the bank are left with fewer coins in their pocket. Stocks can also be a reasonable way to beat or keep pace with inflation. But not all types of stocks are winners in periods of high inflation. Companies and funds that can pass on their rising product costs to consumers, like companies that make hard assets, are generally going to do fine, if not better, during high inflationary times, meaning they make for great investments during those periods. These are just a few ways to make inflation work for you. And at the end of the day, while inflation can turn very sour when it runs out of control. There are ways in the near and midterm to make it work for you and end up better off when inflation does end up cooling off.
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