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Are utility prices at all-time highs? You even cut back on usage!
Is your grocery bill consistently going up? But you keep making the same
purchases!
Have the prices for basic flights increased recently? Oh no, it's practically doubled
since your last check!
Sadly, if you answered yes, you’re experiencing the result of rising inflation.
Do you wish to save your income and savings from the effects of inflation?
Do you want to protect your funds from the rising economy?
Want to know how you can make your money inflation-proof? Let's look for your
greatest options!
Rising Inflation & Less Savings: What To Do?
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The Canadian consumer price index reached 8.1%, making it hard for investors
and savers to protect their money from rising inflation.
The salaries are the same, but the cost of living has increased tremendously.
So, what can you do to keep your savings safe from inflation? Here are some
helpful tips:
1. Invest In Unique & Timeless Items
The key to surviving inflation relies on unique and irreplaceable items.
You must invest your money in things that won’t easily be replicated but still
retain their worth.
Consider things like limited-edition cards, property, and real estate. Because they
are all difficult to copy, they all do incredibly well during the inflationary craze.
Here’s how you can invest during high inflation:
2. Consider TIPS To Negate Inflation Rates
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TIPS might be your best capital option to protect your money from inflation.
As the government backs these bonds, they mirror the increase and decrease in
the economy.
● So, if the prices go up, the interest rate increases too.
● But, when the rates go down, the interest rate reduces too.
TIPS are a great method to diversify your holdings and boost your retirement plan
because the state controls them.
See: Fund Your Golden Time With 6 Credit Retirement Tips
3. Look Into Short-Term Bonds
Having short-term bonds is more like keeping your money in a savings account.
The only difference is that it’s easy to manage when inflation reaches its peak.
| “Short-term bonds can protect your money by keeping it safe from the changing economy!” |
“Short-term bonds can protect your money by keeping it safe from the changing
economy!”
The best course of action is to stick with short-term bonds and to steer clear of
anything long-term oriented as they experience great loss during inflation.
4. Avoid Locking Your Cash
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To avoid the negative effects of inflation on your money, Bridget Casey advises
against putting all of your extra cash into higher-yielding savings accounts or even
investments.
● In fact, the founder of money after graduation is a big advocate for having
some cash on hand.
● Moreover, she says, it’s not a good idea to lock your short-term cash.
Of course, you can save your 6-month worth of emergency funds and put them
into a separate account.
But, she focuses hard on keeping the same amount in cash at your home so that
the fluctuating interest rates won’t affect your money much.
5. Don’t Chase Risky Capitals
Some people might think of changing their investment portfolio during peak
inflation to build wealth and increase money.
However, that’s not a good reason to take the risk!
Yes, it can literally go all the way wrong, and you might end up losing all you had
in the first place. So, nuh-uh not recommended.
● You immediately bought stocks as the profit was looking good. However,
next thing you know, the price dropped to almost negative the next day!
● You started a business and stocked products as they were selling like
hotcakes. However, after a month or two, the sale dropped to almost zero!
Of course, you have to take risks to succeed, but honestly, not all risks are worth
taking!
Hey, don’t you worry! We got a bonus video for you:
6. Rethink Your Budget & Reset Your Necessities
Thousands of Canadians who struggle with money management may receive a
reality check from the rapidly growing inflation rate.
So, reviewing your finances and spending patterns has become evident before
thinking of anything to invest and double.
Moreover, it’s also important to budget your money and make plans that can help
you combat inflation.
● Start tracking what you spend daily,
● Be efficient and cut back on everything you can,
● Categorize your money to get the best out of it.
You can try budget-friendly money management hacks to ensure you continue to
grow financially even in bad times.
All the things you could do with your savings amid inflation are listed above. So,
now it’s time to learn the “don'ts”.
What Not To Do With Savings During Inflation?
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When Canadian inflation reaches an all-time high, most consumers consider
strategies to combat inflation while profiting from it.
The optimal way to do that is to use a secured credit card, open a savings
account, and invest in sectors that promise high yield and returns.
However, some factors can make you feel the effects of inflation more keenly.
So, let’s read what you shouldn’t do with your money during inflation.
1. Using Money For Major Purchases!
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Did you notice a drop in automobile loan rates? Yes.
Did you immediately push your plan to buy a car? Also, yes.
Did you look into actual vehicle prices? Wait, what?
Although inflation has caused the lenders to offer affordable loan rates,
automobile prices have soared!
In fact, according to recent research, the Canadian new vehicle rates increased by
17.3%.
So, getting a loan for your new car might not be a good idea at the moment.
2. Taking More Risk Than Profit!
Your current financial status influences how much risk you are prepared to take.
Before taking the risk, it's crucial to assess your situation because what you do
with your money today might have a negative impact on your financial objectives
for your 30s, 40s, 50s, or 60s.
● More risk-taking may result in more financial gain, but this isn't always the
case!
● If you lose, you might not have enough money on hand to cover any
upcoming expenses.
If protecting your money is really essential to you, you may want to choose a
lower-interest account that can help you increase your savings.
Yes, ditch that shady investment scheme you just saw on a CFP website.
FAQs
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Here read answers to some commonly asked money, savings, and inflation
questions before ending the guide:
1. What assets do well in inflation?
You must know what yields well before investing your money. Here are some
assets that you can profit from during inflation:
● Real estate
● Stock market
● Gold
● Commodities (all the essentials)
● Government-supported bonds (TIPS)
You can look into these to find ways to make money out of inflation. But, of
course, you must research well before using your savings.
2. How do you prepare for inflation?
One must be prepared at all times to fight the economic demons. Here are some
surefire ways to help:
● Consolidate your credit card debt,
● Make a budget and stick to it (even on fixed income),
● Start putting money into your emergency fund,
● Invest in things that will rise in inflation,
● Reduce your expenses and increase your savings.
One must reduce extra costs to save for the future, as inflation is not a one-time
thing.
3. What to do with savings in inflation?
One of the best ways to stay up with inflation is to invest your money or savings in
stocks.
Although stock prices might fluctuate, they might outpace rising inflation if you
invest carefully.
Conclusion
Inflation can be scary if you don’t have any plan to deal with it.
Only if it was that easy to save your money from the effects of inflation. Well, if
you read this guide, you’ll learn it’s not that difficult!
Of course, you might have to put extra effort but at least you’ll know where to
spend your energy and money.
Disclaimer: We have mentioned tips to protect your money in inflation and also
things you must not do to ruin your savings during inflation.
What are you waiting for? Give it a read and let us know what we missed!
