- Forget fiat
New technology is making it easier for people to store wealth in alternative assets, which provide a hedge against the inflation we are seeing in fiat currencies.
Fiat currencies are more vulnerable than ever to depreciation because of the vast printing of money during the pandemic. On the other hand, the finite nature of alternative assets like cryptocurrencies, real estate and precious metals, means they are not subject to same inflationary pressures as fiat currency.
For investors looking to hedge fiat inflation, it’s important to strike a balance of these assets and avoid putting all your wealth in one asset alone.
- Get your cash out of current accounts
If you’re looking to grow your cash, putting your savings in a current account, that delivers less than 1% interest against an inflationary backdrop of more than 5%, is the last thing you should be doing.
Yet, consumers are still being kept in the dark about how inflation will impact the purchasing power of their money. Instead re-consider your approach to savings in order to keep apace with current market impacts.
- Invest in gold
There are not many certainties in the current financial environment. However, it is certain that gold will continue to be a crucial asset for an investor’s portfolio, despite potential changes in the market.
Gold has traditionally played a key role in the financial sector, becoming the most common safe haven in market storms. Its crucial role in a financial portfolio remains unchallenged and it seems very likely to continue for a long time.
- And silver
It’s not just gold that glitters. In the precious metals environment, silver could also represent an interesting opportunity to diversify an investor’s portfolio.
Silver metal is generally more volatile than gold, with wider movements in both directions. In other words, during the positive growth phases, silver can gain more value than gold (in percentage), while falls can also be broader.
The global physical demand for this precious metal is expected to grow in the coming years. For one, analysts have forecasted a huge increase in the request for silver as a component in electric vehicles…watch this space.
- …but make it digital
Another solution lies in stablecoins, which give investors digital access to the above assets.
These digital currencies could represent the perfect solution for modern investors. Not only can they protect your wealth from depreciating through inflation, but they can now be used to spend on everyday transactions like buying your Pret coffee.
Digital tokens that are backed with physical precious metals provide the enduring value and security of traditional physical gold with the technology-driven liquidity and ease of paper gold.
