Savings and Investment – From the inflation perspective

Savings have always been a habit among people from time immemorial. Savings act like a lifeline in times of financial emergency. People set aside a portion of their earnings with a view to providing for the future. A savings account has always been the preferred choice of all groups of people as it ensures the safety of their hard-earned money. The interest rates are however very minimal as these are highly liquid assets. This continues to be one of the preferred modes of saving even with the advent of many new investment options.

Time value of money

It is very important to understand the time value of money when it comes to saving for a long term. This is where we stress the impact of inflation as well. Inflation is referred to the rise in prices of goods and services which adversely affects our purchasing power. It means fewer goods for more money. The money we spend to buy a property today will be much less than what we would spend to buy it 10 years down the line. So when we save money, the future value of it is definitely going to decrease because of the effects of inflation. That does not mean that savings are of no good at all. It only means that we need to try other options for investment which will appreciate over time.

Inflation cutting down Savings

Inflation is a part and parcel of the economy. It is a normal process that happens with the increase in the economic activity. The rising prices will definitely put more pressure on our earnings leaving only a small portion of savings at our disposal for future investment. With the inflation rates rising, the small amounts we save today will not be adequate to meet our future requirements. It is not possible to stop the rising prices, but we can definitely reduce its impact by resorting to some amount of planning when it comes to picking an investment option.

Short-term investments

The investments that have a short maturity period are a good option as the money would not be locked up for many years. Investors can take up a little risk to earn more income by way of forex trading or cryptocurrency trading. These types of trading can fetch more income for the investors if they pick the right tools. Bitcoin Trader is an online trading robot that provides investment opportunities in the cryptocurrency market.