How to Avoid Inflation Affecting Your Savings

Money is the fuel for the engines that run our society and it has been that way for centuries by this point. Everything requires money in one form or the other to function properly and the quality of our lives heavily depend on how much money we have access to. This can cause anxiety, especially if we lack the money.

For that reason, many people choose to save up continuously over the years so that they can afford to pay for the unexpected or have something for their retirement, for example. But there is a general trend in the financial world that makes saving unattractive in the long run: inflation.

The Problem with Saving

Saving money is a good idea on paper. Saving money means you want to build a barrier that can protect you financially when things get rough, for example. In the short term it is not much a problem, but if you plan on saving long term for several decades you can run into problems.

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The biggest problem is inflation. Inflation happens around us all the time, even as we speak. Effectively it means that money becomes worth less and less. We do not notice it much as our salaries and the prices of items in shops follow it step by step. But with our savings we see it. Money that is saved up is stuck in a time bubble. Decades in the future $100 thousand saved will be worth less than now. That is why people invest their money as that allows it to grow instead of shrinking in value.

Forex Trading as a Solution

Just like stocks, currencies are always going through change in their values. Some currencies grow stronger while others grow weaker. That means there is plenty of opportunity to turn a profit by trading them.

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The key is to be able to analyze trends and changes and through that be able to make a sound prediction about where the currencies logically are headed. For example, a prime candidate for a currency to invest in is a currency of low value that seems to be growing stronger. Because of the low value you can buy a lot of it. And if the value grows you will be able to net a considerable profit.

There are too many benefits and technicalities to go through in this article, so we suggest you go here to learn more about forex trading for further clarification and how you can get started.

Buying Stocks

Another method of avoiding your savings becoming worth less over time is trading and investing in stocks. This approach is very similar to Forex trading: you invest or trade in stock issued by companies, and you analyze the market trends to see which invests will be lucrative.

Some people like to invest in stable mega corporations. It is relatively safe to invest in such businesses as they always experience some sort of growth with a very small risk of decline. Having your savings as an investment in Apple or Google is therefore smarter than simply having the money idle in your account.

Garima Tomar

Senior Software Development Analyst at an IT firm

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