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The best way to preserve the value of your money

What is the best place to put your money if your primary focus is to preserve its value During the recent financial crisis, both stocks and bonds collapsed, government debt is also approaching unsustainable levels, and the Federal Reserve is "printing money" which makes holding cash seem more risky than ever. In addition, real estate lost its value during the crisis and has become a constant cost, such as .property taxes. So what is the best way to preserve the value of money


When it comes to preserving value, it becomes important to know the length of time. The S&P 500 outperformed 3-month U.S. Treasuries by 2-3%, which may make stocks look like a good long-term investment. As for the short-term, 3-month US Treasuries are considered relatively safe because they are backed by the economic strength of the US government, which has a good economic situation. This article will acquaint you with the best way to preserve the value of money.

How inflation affects your savings


The national average cost of a movie ticket in 2005 was 6.41, and it has jumped to 9 9.16.1 by 2019, and then to 12.29 in 2022. The price of a movie ticket, a house or a semester in college tends to rise


How inflation pushes savings into deflation

Let's say you have $100 in a savings account that pays a 1% interest rate. After a year, you will have $100 in your account. But if the inflation rate is 2%, you will need $102.50 to get the same purchasing power with which you started. You may have won a dollar, but you inevitably lost purchasing power. This means that if you are a pensioner living on your savings, you can not maintain the same standard of living if inflation reduces your purchasing power with each passing year.

What is the reason behind inflation?

Inflation occurs with the growth of demand for goods and services. As the total money supply in the economy rises, there is likely to be greater demand from consumers, and as more people buy more goods, sellers raise their prices.
Inflation may result from other factors as well. For example, winter frosts may damage the orange crop, which may cause a shortage of oranges and increase their cost; the automaker may have to pay more for spare parts, which will force it to pass this increase on to consumers.

Measuring inflation

How to measure the impact of inflation on your savings The Consumer Price Index (CPI) tracks the prices of a variety of consumer goods and services, including transport, medical care, and housing, and the index is published monthly.

What is the best way to preserve the value of money?

If you are a retiree receiving Social Security payments, you may see an increase in your monthly check from year to year. It happens because the government adjusts payments based on the cost of living, according to the Consumer Price Index. But this increase requires congressional approval.
An increase of 1.6% was approved for 2020, which is the same percentage increase as for 2019. The increase was 2.8% in 2018, it was 2% for 2017. But in 2016, the increase was only 0.3%. By 2023, the Social Security Administration estimates that the increase will be even lower: 0.2%. These figures are based on the Consumer Price Index, but advocates for pensioners argued that this was not enough. They noted that goods and services that are mostly used by older people, such as health care, have seen price increases greater than the general indicator.

How to protect your savings

The basic way to preserve the value of money and overcome inflation is to invest your savings to achieve a better return than you can get in money market accounts or savings accounts. Investing in anything else may involve more risk than an account insured by the FDIC, but you can choose the right investments for your level of risk tolerance.
Retirees may want to consider, for example, inflation-protected Treasury bonds. These bonds adjust the interest payments they receive based on changes in the Consumer Price Index. Even if prices fall during the investment period, you will still get back the original amount at which you bought.
Returns on equity investments in general may also beat inflation, and investors who want to avoid the volatility associated with individual stocks may opt for mutual funds or exchange-traded funds that have lower fees than other index funds.
Investing part of the savings in precious metals such as gold or silver is another way to hedge against inflation. Direct purchase is a traditional way to invest in these assets, but you can also invest in various precious metal ETFs to reduce storage costs.
Inflation may reduce the purchasing power of the consumer over time. Fortunately, there are ways to preserve the value for money and purchasing power of your savings as long as you invest in a way that keeps your risk level moderate.