Why Investing is the Best Way to Hedge Inflation

By: Marie Claire Lagrisola

The less fortunate, middle class, and the rich – you name it, everyone is feeling it. This inflation is making us lose purchasing power.

Inflation this year has been scaling up, leaving everyone panicking and dumbfounded. The rising prices and the overall price stability of goods are affecting how we consume goods and services. Even our favorite imported wheat bread, Fuwa Fuwa, has gotten higher prices. The gas prices have gotten you thinking that maybe it is time for you and your family to start living a more active life. Suddenly you find yourself keeping track of your finances and hesitating when your beloved child asks you to buy them something. That is why you should forget the bank, and appreciate your Crown Asia house and lot for sale more because if there is one thing that would boost your finances and keep you afloat throughout the chaotic and painful consequences of the inflation rate, it is your real estate. Although, to be safe, sure leave some money in your savings account, but if you really want to be at the better end of this deal, if you want to be among the rich who are benefiting even more during these tough times, you need to put the majority of your money in investments.

Let Us Talk About Why Investing Is Still a Good Move When Purchasing Power Is Limited Due to Price Rise and the Consumer Price Index Becomes More Unpredictable:

Do what the rich do: invest

First off to outsmart the rising inflation, let us start with what most people who, unfortunately, do not know any better, do: pile up their money in the bank. Understandable because this is what is commonly taught. We have always been told to put our money somewhere that is safe and secured, with little to no chance of getting stolen. And the first thing that comes to mind to give that kind of assurance is a reliable bank. But there is this saying that is little known to others: the poor spend, the middle class save, and the rich invest.

And with this spiked inflation, we want to be in the spectrum of the rich, right? Especially when they are getting even richer during this seemingly tough time.

Don’t just add money, multiply it by investing

Why invest? Let us compare the profit of the two. The highest interest rate of our banks here in the country is 2%. And that is already rounded off. On the other hand, the returns you can get in investments in the Philippines go as high as 17%. To picture it even clearer, say you invest 3 million in a bank that has interest rates at 2%, you will get 60,000 pesos per annum. Looks a lot, yes, but that hardly compares to what you can get through investments. If you invest the same 3 million in a company whose interest rate is 17%, you will earn 510,000. In other words, every two years, you can purchase a house and lot for sale with that kind of return rate.

Indeed, if you want to build that generational wealth for your kids and your future grandchildren, the way is to invest. You will hardly earn money by putting them in one safe basket that is a bank. A savings account is for people who are not willing to take the leap to greener pastures. Meanwhile, investments are for people who know better.

Being an investor when the inflation rate is high is actually a good thing

Unfortunately, this is why the poor stay where they are, and the rich get richer.

During inflation, like what was previously mentioned, a lot of people panic. But a small portion of people who know better quietly sip their tea and enjoy the extra profit they get. They are probably businessmen businesswomen, or investors. Even more likely, both. Why? When there is inflation, companies have a great and necessary excuse to increase the prices of their products. And although the cost of their production also increases, nevertheless, even more money goes into their pockets.

If you do not have a big business such as Jollibee, SM, Filinvest Homes, and whatnot, worry not because you, too, can have your own share of the pie — through investments.

And arguably the best investment of them all during the current times is nothing but real estate.

Why real estate is the best kind of investment

What are our basic needs? Aside from oxygen, food, and water, we also need a roof on top of our heads. Everyone is in need of a home. Additionally, where do restaurants, convenience stores, water distributors, clothing lines, and other businesses, make and sell their products? Isn’t it under a roof as well? This goes to show how important estate is. May it is commercial estate, industrial estate, land, or residential real estate, pretty much everything requires a tangible place to make things possible.

Just imagine if you hold a lot of real estate where families can live and revolve their entire lives as well as where businesses can build up their own businesses. You will be in demand in no time and more. This is why real estate is a good investment while we wait for our economic growth to stabilize and while inflation rises here in our country.

To add, real estate is one of the few things that increase in value over time. Unlike a car and many other things. Say you buy new clothes or a car. The moment you wear them, the second you drive your new Fortuner out of Toyota, their values go down. If you bought a piece of clothing for 1 thousand pesos if you sell it to a thrift clothes store, you will not get any profit from it because you could only sell it now for 300 pesos or less. Your car, even though you have only been driving it for less than a month, will be worth thousands of pesos less of worth from its original price if you sell it to another person.

This does not apply to real estate. In fact, quite the opposite. If you buy a home, after 10 years or so, you could sell it for up to a million more pesos than its initial price. Or, if you do not want to let go of the land title, you can rent out your home. This is business. And it is also the kind that will always be in demand because everyone needs a house and lot for sale to shoulder their dreams and comfort.

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