How to hedge your money against inflation?

How to hedge your money against inflation?

Inflation, as per its definition, is an increase in the prices of commonly used goods and services in an economy. This metric is most frequently measured by alterations in the Consumer Price Index (CPI).

Many factors contribute to the price increases, including supply chain disruptions due to COVID-19, surging consumer demand for products, and surging wage pressures across various areas of the economy. Due to the war in Ukraine, severe geopolitical tension is fanning the flames. All of these factors pose a significant risk to the average consumer.

The problem for households in Pakistan is having lower income levels and retirees living on tight budgets.

The pressures of inflation can take a toll on the purchasing power of your income, leaving you struggling to cover rising food prices, energy bills, housing costs, and medical expenses. The results can be devastating to your personal financial situation.

Read Also | How to protect your money from inflation?

Fortunately, there are various ways to protect your finances from the impact of inflation. A standard approach is to maintain a flexible budget so that you’re able to temporarily decrease your everyday expenses during challenging times. 

However, not everyone may be able to do this. The benefits, on the other hand, can be immense for those who are able to manage by adjusting their lifestyle and decreasing their expenses during hard times. Preserve your hard-earned savings and avoid making poorly timed asset sales to gain a sense of financial peace.

Another way to save your investment portfolio during a period of inflation is by resorting to investments in assets designed to hedge against inflation. These assets have a high probability of generating income and increasing in value in the face of rising prices. 

High-yield bank loans (HYBLs) and real estate investments are effective ways to protect your finances from inflation. The protective nature of these investments stems from the fact that their interest rates reset to keep pace with the prevailing market rates, which are correlated with inflation.

Read Previous

Miftah says no added taxes on already burdened masses

Read Next

5 fun things to plan this weekend