Inflation is a general increase in prices and a fall in the purchasing value of money. It leads to disequilibrium and thus undermines the ability of money to serve as a tool for market coordination. When inflation is too high of course, it is not good for the economy or individuals.
The rate of inflation can affect; your financial situation, savings, mortgage payment.
How do you protect yourself against inflation?
Here are ways.
1 INVEST IN YOURSELF
This is very very important. This is the first way to protect yourself against inflation. It begins with quality education and continues with keeping skills up to date and learning new skills that will match those needed in the not -too distant future.
2 INVEST IN STOCKS
People are sceptical about stocks, owning some equities can be a very good tool to fight inflation. Investing in stocks allows you to diversify your money. Best stocks to own during inflation would be in companies that can increase their prices naturally during inflationary periods. Commodity resource companies are one example. Products like oil, grains and metals enjoy pricing power during periods of inflation.
3 INVEST IN NATURAL RESOURCES
This is an area where you can also invest to protect yourself against inflation. During inflation the price of commodities increases this is a general belief. And there is truth in it.
Around the 70's when inflation was very high. The prices of gold, oil went up. It is almost impossible to have high levels of inflation with relatively muted commodity prices.
4 INVEST IN REAL ESTATE
Real estate investment is key to combating inflation. As inflation rises, so do property values, and so does the amount a landlord can charge for rent. Acquiring a home to live in is a good investment, over time you will notice that home prices have increased.
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