Today, many countries on earth are crying about rising inflation. They are talking about 40-year highs and 30-year highs. I told a British friend jokingly that the UK needs to come to Africa to learn how to manage high inflation.
Inflation is when the total sum of a currency gets “inflated.” We see it in the fact that it takes more units of the currency to buy things. For example, in Nigeria where inflation is at about 18%, the same flight routes that cost about N30,000 at the beginning of 2022 were going for about N80,000 by mid-year. This is the same situation across industries: food, automobile, construction, etc.
It means that projects have to be suspended, and businesses have to close shop as operations become unsustainable. It means that GDP goes down, tax goes down, government spending goes down, and nothing seems to look up.
Investors shift uncomfortably in their chairs as the rate of inflation exceeds the rate of return on investments.
What do you do?
Shop for new investments that reflect inflation.
For example, real estate prices go up as inflation goes up: real estate reflects inflation. The stock market is also supposed to reflect inflation. This came to play after the COVID-19 palliative payments in the USA. The payments were made from newly minted money, and the market grew as a result of the influx. However, there are obviously too many factors influencing the prices of stocks such that now in 2022, many markets went down despite the high inflation.
Differentiate between needs & wants
As prices go up, you may find that the same amount of money you have has less buying power than before. Review your regular purchases and place higher priority on the things you really need.
Image by Steve Buissinne from Pixabay