Inflation hits 4.7%, a 2-year high last February. Here’s How You Can Fight It.3 min read
Last week, the Bangko Sentral ng Pilipinas mentioned that inflation could settle within the 4.3 to 5.1% in February, and like clockwork, they got it right–with inflation hitting 4.7% by last month’s end.
The uptick in global crude oil prices and elevated prices of consumer goods such as meat and fish are seen as could-be culprits in the rise of prices. Because of this, the government has implemented a temporary price cap on meat products for the National Capital Region.
While measures are being put into place, it was reported that the nation is expecting a more challenging year in terms of budgeting for 2021.
While inflation is as naturally-occurring as storms, that doesn’t mean we can’t prepare for its effects, or perhaps even fight against it. Later on, we’ll share with you three areas you can invest in that’s less likely to be affected by inflation. But for now, let’s find out what’s causing our prices to rise.
What is causing the inflation?
According to the Philippine Statistics Authority, meat prices, specifically pork and chicken, soared to more than 20% for two consecutive months. One reason for this is the African swine fever (ASF) that affected many pig raisers across Luzon. Also, a domino effect of this hog sickness is increased demand for chicken, which is still low in supply because many poultry suppliers went bankrupt last year.
Add to this the rising prices of crude oil because demand is coming back and it’s a recipe for inflation.
However, this is seen as a temporary trend. As soon as the supply chain is fixed, inflation will be under control once again.
Again, like we said earlier, inflation is something as certain as anything comes. Even though we dread its effects, we can be assured of the face that we can actually prepare for it. So here are some areas where you can put your money so that it retains its value regardless of inflation.
Where should I invest so I can fight inflation?
Invest in the stock market.
Investing on stocks is a very good way to make your money work for you despite inflations. According to popular investor education website, Investopedia, some of the best stocks to invest in during an inflation are companies that can increase their prices during inflation. Examples are commodities (eg. oil, gold), grains, metals.
Healthcare companies are also a good investment path because they offer strong profit margins and demand for health almost never wanes.
If there’s one thing you should remember: in the long haul, stocks have outperformed inflation so build a portfolio and get into stocks as soon as you can.
Invest in Real Estate.
Another smart and winning investment option against inflation is real estate. Land and property always appreciates, sometimes exponentially when several developments are being made near the area.
Like stock investments, real estate investments are typically held on to for a period of time, maybe even longer. It may take years for real estate to generate positive returns: that means recouping your investment plus profits because the value has risen. But even if it may take long, at least real estate investments are more stable and assured in value increase than stocks.
There are plenty of ways to own real estate, you can pay off with straight cash–which is always the best option as you don’t incur debt. Or if you have good foresight, take out a mortgage that you can pay off on a longer period provided that the land value has grown to more than the principal after you’ve paid the mortgage off.
The time to strike on this is now. Since COVID-19 hit, some people are looking to liquidate their assets to have more cash at-hand. You might snag some deals on real estate today that might not be available at any time except today, so watch out.
Invest in self-improvement.
Probably the easiest and arguably the best investment to get into is investing in yourself. Despite all circumstances, inflation included, you can increase your value by investing in yourself.
By investing in yourself through skill upgrades or addition, you will increase your earning power. Try to see which skills are in high-demand in the market and learn those. Being able to stay sharp and be on the cutting-edge, especially in an ever-changing environment like business, will be the difference between you succumbing to inflation or rising above it.