As history tells us, inflation has not always been met by similar increases in income. This means more people’s salaries increase over time but far slower than inflation rates. In due time, the purchasing power of earnings become less than they used to be compared to a number of years back. While the average worker doesn’t have much of a say in inflation rates, do nothing to affect inflation rates, protecting your earning from inflation using old techniques and secrets is sometimes the only way out.
Invest in Commodities
Commodities such as food items and precious metals tend to increase in cost value over the long run. Exchange-Traded Funds (ETFs) trading in these commodities provide an ideal inflation hedge for investors seeking a refuge for their earnings.
Invest in Stocks for the Long term
Stocks are often seen by investors are an ideal vehicle for long term investments since stock prices tend to follow inflationary trend. Companies dealing in must-have goods such as foods, utilities have the pricing power to compensate for inflation. This way such companies maintain a similar level of profitability with a poor-down effect on stocks in the long run.
Invest in Bonds
A special kind of bonds, Treasury Inflation-Protected Securities issued by the Treasury Department is tagged to the consumer price index. Interest rates are reviewed and the principal adjusted according to inflation over a period. Although bonds of this nature do not earn high returns, less than 0.5% as at mid 2008, investments made will not shrink too much. And of course, there’s the confidence that the principle is receivable when mature unlike shares of companies that vanish overnight as soon as they go bankrupt.
Fixed rate mortgages have the benefit of standing the test of time. These mortgages are inflation proof and coming from a buyer perspective, there’s more to gain than lose during a time of inflation. Supposing a consumer A secures a $200,000 fixed rate mortgage over a 10 year period during which inflation rate comes to an average of 10%, consumer A has actually benefited from inflation since in monetary terms, the value of what he’s paying for has actually risen compared to how much it was when the mortgage was secured.
Invest in Art Collectibles
Art collectibles are a more natural way of earning an extra something over a product bought years ago. Except the art substantially depreciates to affect its quality and worth over time, investing in art collectibles may help hedge some funds against inflation. Although, recouping these investments might not come immediately as collectibles do not possess much liquidity compared to other investment avenues such as shares, bonds, and certificated holding of a precious metal. A genuine interest and understanding of art collection should put one in better position when this is to be done.
Ask for a raise
This is a last option tactics you might play on your bosses. Asking for a raise means you’ve acquired justifiable achievements to warrant such a raise. As the people in charge are not likely to accept pay-raise demands straight away, your negotiation skills are quite important when seeking a raise. Rather than seek a direct increase in wages, negotiating for more days off, increased health or retirement benefits, or something appeasing to you could pay off on the long run.
For workers at the bottom of the workforce, negotiating for a pay rise might as well mean losing the job altogether. In this case, one might want to joggle a part-time or weekends only job to compensate and increase earnings.
In every thing you do, never forget to plan ahead. In our world, inflation is a more welcome development as compared to deflation. Plan for the future ahead, and only invest in opportunities that have a reasonable chance of protecting your income against inflation.
Always keep it in mind that there’s not a holistic approach to getting it right. Engaging the service of a Financial Advisor nearest to you is sometimes important, especially when larger figures and the more complex investment vehicles arise. Advisors are usually able to explain the workings of an investment opportunity applicable to them in absolute detail.