Inflation is the rise in prices for goods and services. It has a direct impact on your savings as the same goods and services will cost more than a month or a year ago. If you own investments with a fixed annual return, inflation negatively impacts on performance because your return reduces by the amount inflation goes up.

Imagine you’re thinking about a new investment but are concerned about rising inflation. Rising inflation means your savings will buy you less investment – but there are ways to protect yourself against it. 

Real estate has the potential to serve as an effective inflation hedge. Assets and investments that generate income or appreciate over time will be less affected by inflation. With Australia now experiencing above-trend inflation, investment in property could benefit your wealth.

You’re probably still wondering how that’s possible? Here’s an example: Imagine you had a $200,000 home loan 20 years ago. That was a substantial sum of money at the time. Over time and due to inflation, a $200,000 home loan is now small as it has depreciated in value whilst the property has appreciated. Because of inflation, the current loan amount does not have the same impact as it did 20 years ago.

Now is definitely a good time to borrow money for investments that will appreciate. Are you interested to know more? 

At Micah Finance Solutions, we offer you different kinds of financial solutions that suit your needs. It is our passion to help you make sense of money and build long-term wealth.

Book a Free Consultation today and find out what is possible for you!