Hello! Wednesday is a time to talk about finance and investment., so there are posts on Wednesdays @long_term_investments. Today in #постывбудни I want to touch on the topic of inflation growth in the world, about that, who benefits from it, not profitable, and what to do for ordinary investors? Before, how to read – like the post!
Inflation GrowthEat Growth
Inflation is growing not only in Russia, but all over the world. Its main catalyst is soft politics FED, expressed in the retention of bets at the minimum level, supporting the economy through the purchase of assets on the stock market and even the issue of dollars. Also, the growth of inflation is affected by the growth of demand for raw materials in China., who first defeated the pandemic.
So, in Russia, official inflation according to the latest data is 6,68% at the target level of the Central Bank of the Russian Federation – 4%. I boldly multiply the official inflation value by 1,6 is a kind of corrective factor for me. About how much the growth of food prices differs from the official inflation.. Total we get 10,7% minimum.
Why won't the U.S. stop printing money?, stimulate the economy and will not raise rates? Because it's not profitable for them.. Nothing personal, just business.
Think of the U.S. national debt., it's getting closer to 29 trillion. Doll. At the same time, the US dollar accounts for about 40% world calculations and 60% Reserves. Ie. the country owes other countries in its currency and in the currency of the whole world concurrently.
If you depreciate this currency, then it turns out, that the U.S. in real terms will have to be less. It's about the same, what to take a loan under 5%, when inflation in the market 10%. In this case, you (conditional USA) in the win on 5%, and banks (U.S. contingent creditors) in the loss on 5%.
Hence the reluctance to fight inflation in the United States and the continuation of stimulus measures up to the printing press.. Therefore, in the West, active propaganda of life on credit.
Russia, for example, this trick won't work, because. foreign countries do not need rubles, all calculations are made in hard currency. With ruble inflation, external debt will remain unchanged in dollars. In this case, vice versa, there is an additional burden on the budget, because. it is formed in rubles. Although there are advantages: as the ruble depreciates, revenue from exporters is growing in ruble terms their products are becoming cheaper in dollars.
For the reason that, that the entire world system is interconnected like a web, inflation in dollars extends to other currencies around the world. Emerging markets and weak economies are primarily affected., who have a large share of imports with incomparable exports.
Ordinary people are also losers., working for the national currency. Usually, the growth of prices outstrips the growth of wages, so people start to get less in real terms..
This, By the way, beneficial to politicians, since at this time you can loudly talk about raising wages in all areas, but often this increase is either below the inflation rate, or flush with it. Therefore, there is no question of any increase in well-being in this case..
High inflation is not terrible for people with real assets: Real estate, shares, business, because. real assets are revalued in accordance with inflation. For example, now stock markets are rising mainly due to rising inflation, not because of real economic growth.
In the worst position is the population with savings in any currency or in banks at low interest rates.. Because of inflation, these savings are rapidly depreciating.. Most of the population of Russia just falls into this category., because. does not have financial literacy, to invest in more profitable financial instruments.
So it often happens that way., that during inflation, everyone starts buying up durable goods, few people invest. Investors this is a plus, because the demand is growing, and there is a revaluation of their capital. Hence the expression: the rich get richer, the poor are poorer. There is a kind of overflow of capital from the population to investors during crises.
In order not to be at the broken trough during the growth of inflation, it is necessary to have investment capital in the form of shares or real estate. Avoid large savings in the form of cash in any currency or long-term deposits in banks at low interest rates.
For example, I'm instead of, to keep money simply in currency or on a deposit at a low interest rate, I choose short-term bonds with maturity of no more than 1 years with profitability, comparable to inflation. I can also keep funds in savings accounts, if the conditions allow you to withdraw money and the percentage is high enough. This all concerns the reserve part of the investment portfolio.. Now the distribution of stocks and bonds in my portfolio 55% on 45% respectively.
This ratio allows you not to miss the growth of the stock market, protect against inflation, and at the same time have a liquid stock of funds, to invest them in stocks during a crisis or market downturn. No one can say: will inflation continue or will it stop? How will certain actions behave? Will there be a crisis or further growth??
I am often asked: how long will it grow (fall) stock X, where will the market go next?? I have no idea and do not pretend, that I know the future, like other bloggers. I just have a balanced portfolio and am ready to grow., and to the fall of the market.
Therefore, inflation for investors in the stock market is not so terrible., vice versa, it leads to the growth of markets in nominal terms. Like, if you liked the post. Write your point of view about inflation in the world and its causes. Make an appointment with me for a consultation, if you feel such a need!
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