The COVID-19 has brought a great financial crisis and economic downturn. Governments are now spending large funds to deal with the situation. But after the pandemic, most of the economies will have a higher debt to GDP ratio.
As a consequence, governments will try to stabilize the ratio. They try to stabilize the economy by inflation. In this article, you will find the top 5 reasons why you should be concerned about inflation after the pandemic. You will also get to know how to deal with the situation in a better way.
1. Long Term Investments Are Falling
If you are a long term investor, then you must reconsider your investment portfolio. In the past decade, the stock market has not shown much good indication for long term investments. After the great depression in 2008, the long term investment opportunity in the securities are falling.
Various financial studies have revealed that the five year and 10-year returns in the stock market are very poor. However, that does not mean you should not invest in the long term, but you should take more cautious steps before investing for the long term. The study revealed some data which says that large and multi-cap funds are below 6 percent and on a five-year basis and the return is only 10 percent or less on a 10-year basis. So the long term perspective is not so exciting.
This gives a lesson, that systematic investment plans could have a better option than equity investment. Now you should be concerned about your long term investment and evaluate it. Because there is a high probability of inflation after COVID-19.
2. Cryptocurrencies Are Gaining Popularity
In the past decade, cryptocurrencies have gained so much popularity that investors are interested in them. The biggest drive for investing in cryptocurrencies is the success of bitcoin. The bitcoin burst has provided a 24000% return to a crypto investment firm named Digital Currency Group. Moreover, the value of bitcoin has grown from a negligible amount of 0.0008 US dollars to 10000 US dollars today.
Despite, there is much skepticism about the crypto market, many crypto investors from Profit System have made significant profits. Due to COVID-19, most of the cryptocurrencies have gone down to half of their value. However, the value of the cryptocurrencies has returned to their previous value in the last 2 months.
Many crypto investors consider cryptocurrencies as an alternative investment during a market crash or inflation. Again, Bitcoin is considered as digital gold, and an effective way to hedge against the inflation post-COVID-19. So investing in bitcoin along with few popular cryptocurrencies is a suitable investment option. However, cryptocurrencies must be seen with speculation and take risk according to your capacity.
3. No Real Estate
Investing in real estate is not a good option, you can buy a home for staying in it. But real estate is not a good investment option during this time.
4. Gold
Don’t forget Gold, the haven for fighting against inflation. Consider your investment portfolio and diversify your investment with Gold to manage your risk profile. In the past, Gold has provided a good return in the long term during inflation. So consider gold for the current situation.
5. Financial stability and Safety is Most Important
During this coronavirus pandemic, most of the equities in the market have performed very poorly. This downturn will continue for a long time. So investing in risky assets is not a good decision during such situations. The best way is to go for safe investments such as bank fixed deposits, or government bonds, etc.
Apart from this, if you are not sure where to invest then the best choice is to save as much as possible for your future. So you can put more percentage of your wealth in savings and less investment in risky assets like stocks, real estates, or digital assets.
Conclusion
All of the above factors suggest that you should be getting ready for inflation after the COVID-19 pandemic. As the government is printing a huge number of banknotes, the value of traditional currencies will decrease shortly. So taking the necessary steps to fight inflation is a good decision. Hopefully, the above information has helped you to understand why you should be concerned about the inflation post-COVID-19.
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