Many people say that saving is a must. Putting money in a savings account, however, does not account for inflation and will likely give you a negative return. Most banks offer savings accounts with an interest of less than 1%. The problem is that the annual inflation rate is higher than that. How can you fight inflation effectively?
Put Your Money Where it Moves
Aside from maintaining a savings account for the rainy days, consider putting money into investments. There are two ways to do this: the first one is to invest to increase your wealth and the second one is to invest to maintain the value of your money.
The former refers to businesses. Whether you start or invest in a company, money put into a well-handled business will give you a return on your investment. The latter, on the other hand, deals with buying rights to paper assets like stocks and bonds or tangible ones like real estate and diamond jewelry loan. Both strategies may require time before you earn anything substantial, though.
Get a Long-term, Low-interest Loan
An unexpected way to beat inflation is to get a loan. A long-term, low-interest loan like a home mortgage means you are paying for the value of the debt with lower-priced dollars. A debt with a fixed interest rate will have you paying a set amount monthly. As inflation rolls along, the value of the amount decreases and hence, you are able to use inflation to your favor.
Consider What You Need
Think of your personal needs when choosing a strategy. Buying items for investment will give you greater liquidity than going into business. If you have diamond jewelry, for example, it can be used as a loan collateral should you run into a spot of financial trouble. Remember that for loans, you need to read the terms carefully and make sure you have enough budgeted monthly for what you are paying for. This way, you can remain ahead of inflation no matter how bad it gets.
There's nothing wrong with saving money in the bank, but you should know that there are other types of investments out there. Don't stick to one if you want to make the most of your finances.