In recent days, we had gone through rising oil price, then rising food price.. and as if that is not enough and making matters worse, oil rose even higher.... Inflation soared to 6.7 percent in March. Simply put, everything has just become more expensive. The worst part: they may not come down for quite some time.
What is inflation? Well, let me illustrate with an example: Assuming an inflation rate of 7 percent, something that costs $10 before, now costs $10.70 after factoring inflation rate.
With the global demand for raw materials outstripping supply, and a host of other factors like shrinking accreage of arable farmland and adverse weather conditions, consumers should be prepared for a new era of high food prices.
To do that, one needs to "counter" the negative effects of high inflation and "grow" the value of money and make money work harder for them.
A few strategies can be used:
1. Start planning as early as possible and ride on the compounding effects of your investment returns.
2. Avoid sitting on Excessive CASH!
3. Seek professional fund advisors. Begin your investment with an end objective in mind. Have your Investment Horizon focused on the Long Term.
4. Know this: there is No One Asset class that will remain profitable and inefficient forever.
5. Adopt a more diversified and balanced approach between equities and bonds.
The necessity of adopting the right investment approach becomes even more important during volatile market conditions.
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