Tips to grow your money amid accelerating inflation

Surging prices amid dwindling household incomes have taken a hit on the savings of most Nigerians.

As the cost of living crisis puts a strain on households, individuals are increasingly cutting spending to survive the difficult moment amid dwindling income and surging prices.

The situation has taken a hit on savings, as many Nigerians are struggling to survive the difficult moment.

BusinessDay in its usual manner has identified four tips that individuals can adopt to grow their savings amid accelerating inflation. Here are the tips:

Stocks

According to PPL, stocks generally offer a haven during inflationary times. They serve as a long-term inflation hedge but can suffer inflation spikes in the short term.

“Some stocks historically tend to do better at producing total returns that exceed inflation such as shares from consumer staples, and financial and energy companies.

“Other industries experiencing growth now are those rebounding post-pandemic such as travel, leisure, and hospitality,” the company said.

Short-term bonds

Bonds are usually investment securities that represent a loan made by an investor to a borrower, usually corporate or governmental.

Read also: Rising inflation bites consumer firms as inventories rise

And short-term bonds are bonds that mature in one to four years while long-term ones mature between 10 years and 30 years.

“Saving your money in short-term bonds is like keeping your money in a savings account but with higher interest rates. They are more resilient than long-term bonds which can suffer losses,” they said.

They also added that with short-term bonds your money is safe and accessible; they will be affected less if interest rates begin to rise quickly.

Commodities

These are usually agricultural raw materials used in commerce that are interchangeable with other goods of the same type. They are often used as inputs in the production of other goods or services

Common examples are gold, oil, grain, natural gas, beef, and even coffee. “These commodities are crucial to everyday life; investors see the value in owning and trading them.”

PPL said, “Commodities are some of the most powerful investments to hedge against unexpected inflation. It is important to note, however, that commodities can also be extremely risky as their prices depend largely on demand and supply, which can be highly unpredictable. The chance of rewards is high, but so are risks of losses.”

Real estate

Real estate usually does well in times of higher inflation, as the value of the property can increase.

It is important to note though that in the post-pandemic era, the demand for commercial real estate, such as office and retail spaces, is still suspended as more and more companies are adopting remote work or hybrid models.

Real estate properties such as residential, industrial, and raw land may be doing better now and are more considered.