Investing with Inflation in Mind

At the end of the year that 1,000 Naira in your hand will hold less value than it currently does. 

Don’t panic, it’s not your fault, it is due to inflation. Inflation happens when there is a consistent increase in prices over a period, and so we end up buying less with the same amount of money. Inflation is bound to occur and while you really can’t do anything to stop it, you can protect your money by investing in assets that tend to outperform the market during inflationary periods. 

Here are four classes of assets that are good to invest in even during inflation:

  1. Growth-oriented stocks in companies that have significant growth potential due to their unique or essential product lines. These stocks don’t pay dividends, but you can earn through capital gains when you sell your shares at a high value in the future.
  2. Commodities like grains, sugar, natural gas, electricity, oil, as well as foreign currencies maintain a relatively stable value even in inflation. Due to their stable demand, investing in commodities can help earn returns above the inflation rate.
  3. Collectibles are physical assets with high appreciating value due to their rarity. They include luxury items like gold, jewelry, vintage cars, artwork, etc. Although their prices are unpredictable, collectibles provide high returns that can help you hedge against inflation.
  4. Real Estate Investment Trust (REITs) allows you to invest your money in and get earnings from high-valued real estate without you buying the property.

While some cash at hand is great for financial security, the key to growing your money in inflation is in having an investment plan with diversified assets to keep the value of your money. And maybe even grow it.

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