In may 2022, the inflation rate in Turkey reached 70%. Yes, you read that right, seventy-percent. These are nightmare scenarios for us in Europe or the US where we are currently averaging around 7-9 procent. But with current events happening around the world we should always be prepared for inflation. That’s why in this article we list some of the ways to shield your money from the devil known as inflation [ in-fley-shuhn ].
Saving money in your bank account/savings
One of the worst options out there is saving your money in a bank account or savings account where you can get an interest rate of 0.08% APY. This is a comedic way of the banks laughing at working class people. Remember, the average inflation rate per year is 7-9 percent. So, let’s do a bit of maths together. 9% – 0.08% = 8.82%. Meaning you are losing about 8.82% per year on your “savings” account.
Starting your own business with your saved money to get income
While this is tons better than saving money in a “savings”account, about 70% of businesses fail in the first year and another 25% of all starting businesses fail within the next 5 years.
So, while this is technically a better risk-to-reward ratio, it is still somewhat risky.
If you are a person that you know, and be honest with yourself, if you know that you can push through and hustle through and grind through then starting a business up makes so much more sense then “saving” it. Not taking a risk is the biggest risk.
Investing
Oh yes, the holy grail, the perfect shield against the animal called inflation is investing.
Investing your money is simply lending out money to other people who are starting a business at that very time. And as a reward for you going out there and setting your capital available to be borrowed, you get an interest rate. And depending on the stock or Cryptocurrency you trade, you might get a high return. The S&P 500 is an index fund that is a basket of America’s top 500 companies and that index has been returning 11% a year on average for the last 50 years. So again, some maths: 11% return – 9% inflation = 3% APR profit! If all these terms sound crazy to you and you have no idea what is being discussed, a good place to start learning and educating yourself would be Fxexplained.co.uk where they explain everything in layman’s term.
Interesting Related Article: “Plan Your Personal Finances in 8 Easy Steps“