Inflation in a country involves an increase in the cost of living and a devaluation of the local currency, which results in money losing its purchasing value. Here’s how to protect your capital during times of inflation globally.
Inflation can be difficult to fully understand for those who are not familiar with the term, but essentially, it is the increased cost of goods and services. In today’s economic climate, especially in emerging markets, inflation percentages can be seen virtually everywhere. So protecting capital from this phenomenon is more important than ever.
Inflation can be measured by calculating the variation in the prices of goods over a period of time. Most commonly, it is reported as a percentage change from year to year. For example, if the price of a product or service increases from $10 to $11 over the course of a year, the inflation rate would be said to be 10%.
In simple terms, inflation is one of the most common causes of the decline in the value of money. But it’s also important to know that if you’ve invested in stocks, bonds and other assets, you can protect the capital from inflation by using them as a hedge against the loss of purchasing power.
Using investment assets as hedges is a good way to protect your capital from inflation. But it’s not always easy to determine which assets will perform sufficiently for this purpose.
Predicting periods of inflation in a country is also not easy, so it is best to focus efforts on knowing how to protect our capital from devaluation. Here are some tips.
Diversify investments to protect them from inflation
One of the best ways to protect your capital is to diversify your investments into various asset classes (stocks, bonds and real estate). It can also diversify between companies in the same sector or industry.
For example, if one company suffers losses due to mismanagement or an economic downturn, another company may do well, so your portfolio will be protected from those losses.
It is important to not only diversify among companies, but also among the different countries in which they operate. A recession in one country could have devastating effects on local businesses and economies; however, if you invest in global businesses in different regions and countries, this risk will be greatly reduced.
Investing in the United States to protect capital from inflation
The U.S. dollar has been the world’s reserve currency for decades and has recently strengthened, so investing in the U.S. has become a promising option.
Investing in the United States is a great way to protect capital from inflation. The dollar is one of the most stable currencies in the world. It also has a high level of liquidity, which means you can sell it at any time without having trouble doing it on a stock exchange or through an investment firm.
While it is difficult to accurately predict how much inflation will rise in the coming years, investors should consider the possibility of higher returns if they get it right, but also the possibility of loss if they are wrong when deciding how much risk they want to take with their capital.
BAI Capital is investing in the USA
BAI Capital or Become American Investor LLC is a boutique firm with more than 12 years of experience specializing in raising, investing and managing private equity. Primarily for capital investments in real estate development projects in the United States.
With a presence in real estate in the states of Florida, Texas and New York. We specialize in generating value from land acquisition to the development of large projects. Such as senior residences, student residences, multifamily rental and mixed-use buildings including condo and retail.
Our mission is to safeguard partner capital and equity under minimal risk exposure. With safe development and going through all stages. Land purchase, urban zoning adjustment, commercial vision in architectural development, and work permit management. We then take charge of capitalization, construction and exit with return of capital and earnings to partners.
In this way, we guarantee fixed and stable returns for our customer portfolio. In addition to having a confidential work protocol with encrypted web forms, use of protected personal data and private encounters with our agents throughout Latin America.