How To Beat Inflation with Savings
The economic meltdown has led to a number of hardships for people around and while we could blame the investment banking community for the role they played we have to take some responsibility as well.
There will be those looking to save their money, however, what they do not know is how to count for inflation.
Inflation is defined as ‘a sustained price in the general price levels’. Basically it is the term used to define the phenomenon when prices rise and the purchasing power of money decreases or it costs more to buy the same amount one normally would.
Instructions
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With that in mind before one decides to save he should compare the rate of return/interest being offered by the bank with the rate of inflation in the market. If the interest rate being offered is less than the inflation rate then it is not wise to save. This is because if you invest $1 in a savings account with a return of 10% and the inflation rate at 20%, you will end up having $1.1 which does not have the same purchasing power, so you actually end up losing out. So only go for saving when the inflation rate is less than the interest being offered.
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However, saving takes many forms and one of them is to purchase prize bonds. These are certificates of a certain denoted monetary value, usually issued by the central bank, which can be exchanged for liquid cash at any time. However, once every so often a draw is made and the winning numbers end up receiving a sizable return. The chances of your bond coming out may be slim but the instant liquidity and chance of becoming an instant millionaire are also there.
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Investing in profit and loss accounts is also a good bet as long as the company or financial institution is a reputable one. Make sure you do your research as to how previous clients of the bank rate it and what their experiences were. Always remember to ask friends and family members that have some experience with financial issues to help explain the different types of accounts that are available to you.
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Saving money in asset form is also a solid option. Gold is one of the more attractive options and at the same time so is real estate or property. Do your research whenever you are looking to invest in real estate or any type of precious metals.
