Selasa, 02 Februari 2010

Investing with Inflation

Investing with Inflation

Inflation is a great concern for Investors. Let me tell you in layman’s language that, what is inflation and how it works? Well, inflation means reduction in the purchasing power of your money over the time. This happens because of the money printing activities oh the government every year. The newly printed money dilutes the purchasing power of the existing money in the economy. This is known as inflation.

In United States, The inflation is around 2-3% per annum. However, some amount of inflation is good for the health of the economy. But recently the US Government has printed literally $ 1.2 Trillion out of thin air only and today the US Monetary Base (Money in Circulation + Bank Reserves) is $ 2 Trillion. The US Government has printed this much amount of money since 2007. And it is now giving bailouts to big corporations and central banks around the world from this money.

Thus, sooner or later, the US Economy will face hyperinflation. So from this Information, it is clear that Saving money is worthless. If you have $ 100,000 in your bank savings account or Cash on hand than it’s not a wise decision because the purchasing power of this money will be eroded because of the federal money printing activity.

And this is the reason you should invest your money so that it grows over the time and maintain it’s purchasing power. No one wants to see their money’s purchasing power eroding. You can invest your money in any asset class. Asset is something which is likely to appreciate in the future.

You can invest your money in Stocks, Bonds, Gold, Mutual Funds, Businesses, Real Estate, Art, Antiques, Collectibles, Web Properties (Blogs, Forums & Domain Names) and many other assets. You should invest your money so that it can maintain its purchasing power as well as to grow it.

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