22 Οκτωβρίου 2017

How to protect myself against Inflation

How to protect myself against Inflation

As you can see in the above picture, the purchasing power of the same amount of money in Egypt (as an example), lost its value because of inflation. The purchasing power almost vanished since 1998.

Can you protect yourself against inflation?
Yes, you can. How?
By investing on stock markets.
See the basic Index of Egypt’s Stock Market, since 1998:

egypt-stock-marketThat’s why you have to invest on stock markets. To preserve and increase your income and wealth.
See also the below graph with the performance of three stock markets for the last three months, ending at Nov. 30, 2016:

venezuela-stock-market-301116

The indexes of Venezuela and Zimbabwe stock markets, were boomed, presented strong upward movement. Why? Because Venezuela and Zimbabwe have big inflation.

See also, the long term grah of Turkey’s Stock Exchange (below), since 1990 – Turkey had a serious problem of inflation:

turkish-stock-market-since-1990

But the prices of stocks, are the best long term hedge against inflation. Because stocks essentially are ownership titles on the rights of the production, sales and profits of a company. By owning stocks, you have a (small) share on the production of a Country. And the prices of the production outcome is adjusted to inflation. So by owning stocks, you have a share in production, that is adjusted to inflation and consequently, protects and increase your income.

See also in the graph below, Price changes in USA in last 20 years (inflation): Textbooks +207%, Tuition +197%, Childcare +122%, Software –66%.

But stocks advanced much more than inflation. See below graph with DJIA and S&P500 (the basic benchmarks):

In my book HERETIC INVESTOR, you can learn how to invest easily and successfully, long term. Anyone can do it!

Panayotis Sofianopoulos

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