Investing Guide During an Inflation
Do you know how much you would have made if you have been investing in S&P 500 for the past 20 years? It is believed that the stock market rise at an average of 10% yearly for 20 years, it will be an average of 2000% (average is the term being used because it can increase and it can decrease but in most cases, it will be higher) but have you thought about investing in a country with high inflation? In this post, I will be telling you a few things you should know about investing when there is inflation that most people do not talk about.
Do not forget that inflation cannot be predicted, and only one or two people understand and investing during an inflation can be very challenging.
Investing in an inflation
Investing has been an amazing topic for a lot of people and they often tell us that the average return from investing in stocks is 10%, but it is very rare to see someone talk about how to invest if the inflation is almost the same as the investment profit. At this point it is good you understand that inflation affects currencies so one thing you should not invest in is currencies. Inflation is a problem associated with cash and once inflation is on the high, it is advisable not to invest in currencies. Also, investing in bonds are not really a cool form of investment during a high inflation as the amount to be made with bonds are fixed and the inflation rate could go higher than the inflation rate. During inflation, I do not see good points to invest in fixed assets and gold as the price will be valued based on inflation.
It is advisable to rather invest in companies and assets that produce revenue. Whatever business that will be invested in should be a business which do not require large capital as requiring large capital can also be affected by inflation so the prices would keep shooting up making the company product expensive and not inflation proof.
Competence and Sustainability
If you are going to invest in a company during an inflation crisis, you should be able to proof that the company is competent with good teams and its revenue can beat the inflation without affecting investor’s funds. Make sure you invest in companies that have foreign routes making your investment safe.
Improve Your Income Power
If you are going to be investing during an inflation, one thing you need to know is make sure your income is increasing on a regular basis. Maximize your talent, your profession, your investment and so on.
