How To Reduce Impact Of Inflation
17 October 2019
During inflationary situations it is important to come up with effective strategy to preserve value;
- What ever you do, make sure you owe rather than being owed. Hyperinflation always works in favour of the borrower.
- Quickly convert all your excess liquid cash into physical assets or commodities as quickly as you can, preferably those that will be easy to convert back into cash when you need the cash, or can be exchanged for other commodities.
- Don’t sell any asset unless you really have to. Especially do not sell big assets like cars, land or house with the intention of buying another one. You may lose value while you are holding the cash, or there maybe a policy change overnight which prevents you from replacing the asset.
- Don’t make long term decisions based on the current situation as sooner or later the market will correct itself. If you are earning forex and you are benefiting from the runaway exchange rate, don’t transfer your children to expensive schools or star renting premises which you will not be able to afford, but for the market distortions.
- Don’t rush to quit your formal job or drop out of college to become a money changer, fuel dealer etc. Most importantly of all, don’t upgrade your spouse because of the temporary upgrade in your lifestyle.
- If you have the opportunity to make some money from the arbitrage opportunities that currently exist, make hay while the sun is shining and quickly convert all your extra earnings into lasting, physical assets so that you have something to show for it when the music stops. Far too many money changers wasted money on big screen tvs and leather sofas while living in rented accommodation, instead of buying a stand or even a small core-house.
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