Inflation has been a household name in the country, especially in the year 2021, and with the constant devaluation of Naira. Prices have continued to increase with every passing of each day, and we wonder when it will stop. If you’re still wondering what inflation is, compare the prices our parents bought things to how much we buy them and how much we will probably buy them in years to come.
“The decline in the rate of increase in the consumer price index indicates that the inflation rate in Nigeria might have peaked and is on its way downward. However, it is still worth noting that an inflation rate of 17.75% is still way higher than the 11.02% recorded before the closure of land borders in 2019 – Nairametrics.”
What is Inflation?
Inflation is the continuous general increase in the price of commodities and the decline in purchasing power of a particular currency over time. The reduction in purchasing power of a unit of currency is determined by the increase in the price of commodities over time. Here, a unit of currency buys less than what it could in prior periods. This leads to a loss of value in money.
Advantages or Disadvantages?
Inflation poses more disadvantages than an advantage to the economy. While a slight rise in the inflation rate can be good for economic growth, maintaining it at a certain level is pertinent for a stable economy. Inflation increases the standard of living and can be bad for savers as it diminishes the value of their money. It also makes importation expensive as the exchange rate increases. If there’s no increment in wages to support the increase in the price of commodities, it makes things more difficult for the citizens. However, inflation favors people with assets than cash as it enables the cost of these assets to increase as the inflation rate increases.
Ways to fight and overcome inflation in our present economy
Invest in Stock:
Stock is known to be the best way to evade inflation. Having stock or equity ensures that the value of your money stays intact. Investing in business and making passive income ensures that your money grows with the inflation trend. It’s advisable to invest in a business that goes with the drift, such as food businesses. Their increase in price doesn’t affect the demand as people need these things every day. While you’re getting returns on your money, the value of your money remains stable. An example of a type of stock to invest in is income stock.
Invest in Real estate:
Real estate is one asset that continues appreciating the longer it stays. It’s a good idea to invest your money in real estate during inflation. Here, you’re sure the value of your money can keep up with the increase in prices and devaluation of money. You could buy land and keep it for the next five years, and it will still maintain value for your money. The key is in having assets and putting your money into good use.
Invest in yourself:
The most important investment in life is an investment in self through gaining knowledge. You can lose that stock or house you got, but you cannot lose the knowledge you’ve acquired. Nobody can take knowledge from you. Constantly work towards getting better in skills and expertise to match with the increase in the labor force.
What does this mean?
If you have a whole lot of money stacked somewhere in a bank account, put it into good use. It will do you a lot of good in the long run if the inflation rate continues to increase.
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