Imagine going to the market with N10,000.00 to shop for soup items, only to come away feeling scammed. Because you could buy half the items on your list.
This is the challenge many Nigerians are facing everyday because of inflation. Nigeria’s annual inflation rate climbed to 15.7% in February of 2022 from 15.6% in the prior month. The spike in the price of petroleum products is the main driver of this inflationary trend.
The consequence of this - fuel price spike and fuel shortage - is higher (15.1%) transport costs. This in turn causes an increase(1.6%)in the cost of goods and services. The Consumer
Price Index rose from 417.6 - 424.40 between January to February 2022
If you are a family breadwinner, a single mother or solopreneur, answer this. How do you stop raging inflation from running away with your hard earned income?
For today, nothing.
The Nigerian economy is already experiencing inflation and you are neck deep in it. So the best you can do now is to plan ahead.
In this post, I’ll show you 4 plans to start today to stabilize your finances against inflation.
Together , We are going to look at opportunities you can explore in
real estate,
cryptocurrency,
high performing stocks,
hard assets (gold and silver)
to stabilize your finances against inflation.
The Naira is under attack! Make no mistake about it. Since the beginning of 2022, the Naira has been losing value against the dollar.
In January 2022 the exchange rate was N412.00 - $1.00. By Feb 9th it rose to N419.00 - $1.00. And as of 7th April it had dropped to N415 - $1.00.
The story is not likely to get better any time soon. The rate could rise to N436.00 by year end.
All these exchange rate fluctuations will
make importation - in an importation reliant country like Nigeria - more expensive,
affect Nigeria’s economic growth
Discourage foreign investors from taking stakes in existing companies
Discourage foreign investors from building new facilities in the recipient market.
These factors will have negative effects on the income of families and businesses.
Cost of goods and services will skyrocket. And make any income inefficient in solving present and future financial challenges.
To counter the negative effects of inflation you can put the following plans into play:
The wise young man or wage earner of today invests his money in real estate - Andrew Carnegie
Invest in real estate
Real estate - as a hard asset - will always be store of value. Its value is not perishable like milk. perpetually. Except in rare occasions where it depreciates. For Example natural disasters like Tsunamis or man made disasters like nuclear fallout in Chernobyl, or war.
Real estate will always be a hedge against inflation. The value remains stable even as the purchasing power of the currency decreases.
Real estate will always be in demand. It is always needed for residential or commercial purposes.
So make a plan to invest in real estate today.
If the cryptocurrency market overall or a digital asset is solving a problem, it’s going to drive some value – Brad Garlinghouse
Cryptocurrency is here to stay. And I don't mean Bitcoin. There are other currencies that are and will remain good stores of value over time.
Crytptocurrencies like Ethereum (ETH, Tether (USDT), Binance Coin (BNB), XRP (XRP, Cardano (ADA)have market valuations of up to $880 billion.
Two factors that contribute to the value of cryptocurrencies are its:
Buy and trade cryptocurrencies today. And protect yourself against future inflation shocks.
Courage taught me no matter how bad a crisis gets ... any sound investment will eventually pay off." — Carlos Slim Helu
Buy & Hold High Performing Stocks
Amazon, the largest ecommerce store in the world is worth $1.57 trillion. Its founder and former CEo,Jeff Bezos, is worth $180 billion. This valuation comes after Bezos sold some of his stock in Amazon worth $8.8 billion in 2021.
That's the kind of value you can get from owning a high performing stock in Fortune 500 companies. Companies like Walmart, Apple, Berkshire Hathaway etc.
If Fortune 500 stocks are out of your reach, then consider unicorn stock picks like SpaceX, Stripe, Epic Games, Instacart, GoPuff etc.
Buy & Hold Hard Assets (gold and silver)
Up until 1971 the US dollar was backed by gold. This is because gold is a good preserver of wealth.
For example, an ounce of gold at $35 in 1971 would be worth $1,972 today. But fait (paper currency) of the same amount would have lost all its value due to inflation.
Smart investors position their investments in hard assets during unfavorable economic situations. Hard assets like gold & silver.
You should too.
And you don't have to buy and hold the metal (which is a choice). Several virtual options are available. Virtual options like gold futures, gold ETFs, gold mutual funds, Gold Bullion.
You can also diversify your portfolio by buying some silver.
Any of these investment options will protect your savings from the frustrating, limiting, and diminishing effects of inflation long before it arrives.
Now you know how to prevent inflation from straining and draining your finances.
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