At the risk of sounding boring, let's talk about inflation—because it's anything but dull when it comes to your hard-earned money.
At the risk of sounding boring, I worry about inflation.
It’s the kind of thing that keeps me up at night.
I kid you not.
Let me explain why.
Inflation has big implications.
Namely your cash and the amount of money you earn.
The cost of goods and services head north, while your hard-earned money remains the same.
You with me?
Inflation devalues your cash, basically.
In the USA the level of inflation peaked at 7.0 per annum.
To put that in context for a moment, the US Fed would like that figure to be more around the 2-3 percent mark.
Australia’s is currently sitting around 5.4% for the previous twelve months.
So how do you safeguard yourself against inflation?
You invest wisely.
The upshot being you don’t want to hold too much cash – I’m talking money in the bank – during an inflationary period.
At a minimum, you effectively want to offset the decrease in value of your cash.
Beyond that, it’s all icing on the cake so to speak.
In terms of investing, you naturally look towards asset classes that do well during inflationary times.
We’re talking stuff like property and gold, with both, on paper, being the perennial safe havens when inflation’s shooting up.
Fingers crossed, though, that Treasury does everything in its power to keep Australia’s level of inflation in check.
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