Here are some key points that you can refer:
1. Inflation is good or bad?
As high inflation is generally considered harmful, some economists believe that a small amount of inflation can help to drive economic growth. – but, inflation rates should be kept at manageable levels.
2. Who benefits from inflation?
Homeowners May Benefit from Inflation
A steady, modest level of inflation is beneficial for the economy, and it can also benefit homeowners and investors.
People pay more for housing, when inflation reduces the purchasing power of money, and this results in the value of property. The value of property increased.
Also, inflation results in the cost of land, material, and labor for building new homes. That curbs new construction and makes existing homes more valuable, boosting demand and further benefiting home prices.
Investors May Benefit from Inflation
Broadly speaking, companies that can raise prices for their goods and services in line with inflation will benefit, while those with inelastic pricing will suffer.
3. Purchasing power affected
Because of inflation, the amount you spend a year ago changes. For instance, if you spent RM2,500 on household necessities and you see it increasing to RM2,700, and even RM3,000.
4. Worries surrounding stagflation
The high rate of inflation is indeed a concerning matter, but stagnance in the country’s productivity and individual productivity that will eventually result in the country’s contracting GDP and high unemployment rate can be an even more concerning matter.
How to Protect Your Money from Inflation
When inflation keeps rising at a rate higher than normal, here are few ways you can take to protect the purchasing power of your dollars.
Plan wisely your expenses. Review your spending and identify areas to reduce or eliminate completely. It will free up money to invest so you can be better prepared for the future.
Wait to pay off low-interest debt. Paying off debt is usually good, but you may want to hold off on making extra payments if you have low-interest debt. Your debt becomes less expensive due to inflation. The extra money may be better used for other purposes—like paying off higher-interest loans.
Do investment. Inflation may cause your savings to be worth less over time. To overcome inflation, you need to do investments such as stocks or real estate investment. If the prospect of investing is scary, consider a diversified portfolio of index funds to lower your risk levels.
Understanding how inflation can affect your day-to-day life can make it easier for you to plan your money. Our economy is on the path to recovery after a long period of isolation, and if inflation levels are safely remained or maintained, we can plan and move further to make sure that it won’t negatively affect our finances in the long run.
We can help investors by finding their new investment. Click the button below to learn more about what we have to offer.
Comments