Inflation happens slowly–it doesn’t explode overnight and usually takes a year or more to fully affect your investments. However, when it starts to climb, you need to take action right away–especially with high-risk ventures.
Changing economic conditions or even geopolitical crises affect all types of investment markets. The best way to protect your wealth against inflation is by putting your money into resilient commodities instead.
You need to be smart about where you put your money and consider investments that appreciate when the value of currencies goes down, or ones that stay stable like gold and other precious metals. These are considered “havens” and are great inflation hedges, especially because precious metals, as their name suggests, are deemed valuable.
Real estate or stocks aren’t as reliable and tend to bubble, threatening to burst the more prices rise.
You need to be ready to inflation-proof your wealth and gold is a fantastic option.
How does inflation affect your wealth?
When markets undergo inflation, prices increase and dollar power decreases. This makes your savings less valuable, forcing you to spend more as you try to continue sustaining your lifestyle.
Inflation impacts your cash savings directly, making them weaker as the cost of living increases. Under an economy undergoing inflation, your dollar won’t be able to afford the same goods and services that it previously could, causing you to spend more.
Protecting your money becomes a priority in these situations and you have to respond immediately by allocating it elsewhere so it continues to appreciate despite rising prices. Lucrative investment strategies should become your priority, even if the rate of inflation is slow.
Plenty of people tend to forget about the risks involved with rising prices because they don’t seem as urgent, but, if left unchecked, your wealth will not be as powerful as it is today.
In order to ensure your wealth continues to grow in spite of general price increases and weaker dollar power, you need to find investments that are lucrative and stable–even in the face of unpredictable situations. Diversifying your portfolio is important, yes, but if it’s full of high-risk investments, you might need to reconsider in order to grow your wealth.
Why gold investment protects your money from inflation
Gold is one of the largest financial assets in the world, with an average daily trading volume of $183 billion. Its value has seen explosive growth in recent years, despite being centuries old. As one of the world’s most precious metals, its scarcity continues to make it more valuable and coveted by many.
Historically, gold has proven to be resilient in the face of geopolitical conflict and economic downturns. Civilisations that have never come in contact with each other have all regarded gold as attractive and inherently precious, as if instinctively understanding its worth. It has endured centuries of being mined, traded and turned into luxury commodities, hardly waning in terms of social and market value.
This commodity is a strategic hedge against inflation because its value is not based on the value of the public’s trust in it like fiat currency or government-backed legal tender.
Its stability has made it a popular investment for those looking to ensure their savings stay protected and continue to remain stable despite rising prices.
3 ways you can use fintech with gold to inflation-proof your wealth
Fintech and gold work together by tokenising precious metals and allowing you to invest in digital gold. Here are three ways that can happen.
1. Gold on-the-go
Digital gold is stored in mobile wallets that you can easily handle, trade and sell with just a few taps on your mobile phone.
Because of this, gold becomes an accessible commodity. Accessibility isn’t something people typically associate with gold because gold is so valuable. Most people don’t see it as something everyone can own, much less trade or sell. Fintech, however, can make that happen–and on-the-go through your mobile phone.
Having your gold on-the-go with you means you don’t have to wait in long lines or feel anxious when inflation is climbing and you don’t have the time to go to the bank. Your phone is all you need to access your wealth and your investments.
2. Tokenising precious metals, including gold
The tokenisation of precious metals, especially gold, is the act of digitising real-life assets that translate to digital tokens. As more investors are moving away from fiat money and towards blockchain-based currencies, even metals have begun to have corresponding digital versions through fintech.
Tokenising valuable metals eliminates the need for unwieldy processes such as storage, physical handling and security.
Handling gold can be challenging because your tangible assets can be damaged without you realising it. It can also be difficult to assess the quality of physical gold by yourself. To the untrained eye, gold might just seem like gold–it’s all the same to people who aren’t experienced with it. However, a lot of gold may be impure or of low quality, affecting your wealth and future sales, if you choose to sell it.
Fintech is known to strictly appraise these metals for purity, having to pass quality assurance tests and maintenance, ensuring your gold or silver is valuable, pure and of good quality. Utilising the fintech route for your gold will bring about some much-needed peace of mind as you don’t even have to give it a second thought.
This is unique in itself, as other investment avenues often don’t tokenise commodities or assets. When your gold is tokenised and you don’t have to worry about its quality, your investments are protected and inflation-proof.
3. Convenient long-term gold investments without volatility
You can start investing in gold now and allow your wealth to grow as time passes. As we mentioned earlier, long-term gold investments are stable and secure, reliable even in the face of geopolitical crises. However, it isn’t always easy because some gold investment options aren’t the most convenient.
Investing in gold through gold bullion (i.e. physical gold like bars and coins) can be difficult if you don’t have a proper vault or maintenance process for it. Looking into mining stocks can also be stressful because stocks are relatively volatile even if mining and gold prices are appreciating. Exchange-traded funds (ETFs) that own gold, while better than bullion, also fluctuate even if it’s more readily exchangeable.
Fintech platforms make your gold investment convenient. No need to worry about volatility in stocks, bullion or ETFs—fintech has it all covered. You can put your money into the asset and leave it alone without having to think twice about it. It’ll grow over time and you can go about your life, accumulating wealth passively.
By the time you want to sell the gold and get your money’s worth, you’ll have fantastic returns on investment and pockets lined with cash.
Your wealth is definitely worth protecting, especially when inflation rears its head or when crises push prices up to make up for crashing markets. Doing this has saved people time, energy and, most importantly, money.
If you want to learn more about how you can inflation-proof your money and grow your wealth even during uncertain times, get in touch with us.