6 Ways to Protect Your Money from Economic Instability


There are very few things that are certain in life. Along with death and taxes, you can always count on inflation. Economic factors like inflation and economic collapse can quickly erode the value and purchasing power of your money. While we have enjoyed no more than 1.6 percent inflation annually over the last five years, it won’t stay that way forever. Here are six ways that you can protect your money from economic instability.

Invest in Gold

Investing in gold is a no-brainer. Gold has proven to be a good investment during economic instability. However, many people don’t know that gold was confiscated during the great depression. This makes the key to investing in gold is to hold it in coin. According to the site Profitable Venture, if inflation takes hold, the value of gold could soar even higher. Before you buy gold, however, you will need to know where and how you are going to secure it.

Invest in Real Estate

Real estate has several things going for it. You can borrow money to buy it, which is good, especially if you can get a low-interest rate on the loan. Property is also getting cheap after years of falling prices. You can now add real estate to self-directed IRA and achieve financial flexibility with The Entrust Group. Property also has an income stream attached to it if you rent it out. However, in terrible times this can be a problem if rent controls come into play.

Eliminate as Much Debt as Possible

The last thing that you want during economic stability is a pile of debt looming over your head. If the market takes a turn for the worse, you want to be able to salvage every penny, advises the experts at CNN Money. If too much of your income goes toward loans, a mortgage, or credit card debt, you won’t be in the best position to save money.

Invest in Stocks

Equities tend to shoot up in times of high inflation. This can make for an extremely volatile ride for investors. However, stocks are one of the few liquid assets you should hedge capital when the supply of money is eroding the value of cash. You can also draw down cash in small sizes for short-term needs, which can be extremely useful.

Invest in Foreign Currency

Due to the massive trade deficit in the U.S., it is only a matter of time before the world looks to hedge its dollar reliance and terminates its dependence on U.S. money, especially if our economy can’t get back into equilibrium. To protect your capital from this, you should consider buying a basket of currencies from the euro, pound, Norwegian Krona, and yen, and know that your money will hold its value if the dollar dives.

Invest in Alternative Assets

Classic cars, coins, paintings, and stamps are all ways you can stash cash when inflation hits. These types of investments are better at riding out a financial meltdown. Real, tangible items, have intrinsic value and inflation won’t hurt them.

Inflation is a way broken economies rebase themselves. The only mistake you can make during economic uncertainty is to ignore the possibility and believe that it won’t happen to you.

 

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