Hi guys! Hope everyone is doing okay. It’s a turbulent time for the country with natural and man-made disasters occurring almost every week. The news, which is often pessimistic, speaks of rising inflation and rising prices. Hence, the need for constant vigilance with our finances.
My current net worth is
PhP 2,604,274.71 / USD 50,082.21
This is comprised of:
Real estate 41.59%
Stocks etc 21.18%
I must admit, the constant stream of pessimism in the news is making me illogically want to hoard a lot of cash. I like being prepared in case of an emergency and dislike the thought of selling equities during a market downturn.
With inflation at 6.4%, it is illogical to hold your money in an ordinary deposit account (which earns a measly 0.25% per annum) as with every year you hold money in cash, it loses 6.4% of its value. That’s simply how inflation works; your money is able to buy 6.4% less goods as every year goes by. Simply put, you’re becoming poorer by 6.4% annually by just holding your money in cash. This is why I try to resist holding too much of my assets in cash and try to divert them to assets that may earn more than 6.4%.
It bears noting though that inflation doesn’t necessarily mean a rise in prices of ALL goods. It merely measures change in price for a certain basket of basic goods bought by the general population, hence, felt by the general population. Sellers cannot justify a price increase on the ground of inflation alone. That would be a simplistic view of things.
How do you plan to deal with rising inflation?