With inflation on the rise, protecting your savings is key. Read our article where we reveal how you can protect your savings from rising inflation. Learn how to manage inflation.
High inflation is caused by several factors. The covid-19 pandemic, which disrupted the supply of goods and increased household demand, has had a major impact. The war in Ukraine is another factor, as it has caused a rise in the price of oil and gas. Money is currently losing value at around 10% per annum, so savings accounts and building societies are not the best way to protect money.
Purchase of shares
When you buy shares, you buy a stake in the company that issued the shares. Shares are a way for companies to raise money to fund growth, products and other initiatives. For investors, it's a way to effectively not only protect their money from inflation, but also to make it more valuable. Another advantage of holding shares is that when a security is held for more than three years, the income is not taxed, this is called the time test. There are two ways to return the invested funds:
- The stock price is appreciating, which means it is going up. You can then sell the shares at a profit or, alternatively, hold them further and speculate on further growth.
- Shares pay dividends, which is the yield paid by the issuer to the shareholder. Not all stocks pay dividends, but many do. Dividends are payments to shareholders out of a company's earnings and are usually paid quarterly.
Real estate is considered a stable investment. Interest rates are constantly rising, which makes people more likely to rent rather than buy a home. This provides investors with a steady supply of potential tenants for their investment apartment. However, buying a property is not only advantageous with the intention of subsequently renting out the property. The property itself increases in value over time, so you will never make a mistake by buying a property. The only disadvantage of real estate is that it is less liquid, so the subsequent sale of an apartment or house can sometimes take many months.
Investing in gold
Gold is seen as an ideal anti-inflationary tool around the world because of its value and rich history. Coins containing gold appeared around 650 BC. Over the centuries, people have held gold for a variety of reasons. It's the metal we return to when other forms of currency don't work, which means it always has some value and serves as a hedge against hard times. You can buy gold bullion, bars, investment coins or securities of mining companies.
Investing in art
Works of art, such as paintings in particular, are also suitable for preserving the value of money. However, you can also invest your money in commemorative coins, vintage cars or vinyl records.