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As we covered previously, inflation makes everything more expensive and eats up your purchasing power, even for your savings. Why Inflation is Bad
So what are you supposed to do?!
The best thing you can do is preserve your savings’ value by investing in assets. Especially assets that are a store a value. (What are assets again? Here's a refresher).
That would mean assets like stocks.
Store of value assets like bitcoin and gold.
Real estate assets like investment properties.
The thinking behind this strategy is instead of leaving an amount of money just sitting there doing nothing but losing value from inflation, you invest it in something that will also rise with inflation.
So let’s say you have $10,000 in a savings account. Then inflation kicks in at 10%. Your $10,000 of savings just sitting in cash would of lost $1000 of purchasing power.
Now let's say you bought $10,000 worth of gold instead of letting your savings sit as cash. The $10,000 of cash has now become $11,000 worth of gold, despite the 10% inflation rate.
All of the best and richest investors know that high inflation times means reduce your cash, maximize your assets.
That’s also why times of high inflation are especially hard on poor people since they tend to hold all cash and don’t own any assets.
Any amount of cash sitting in savings and not growing should be thought of like a big ice cube that’s slowly melting away. It’s still good to have just in case you need it. But unless you want to work until you die, you want to be more savvy of an investor than that. SAVING DOES NOT MEAN INVESTING.
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