Inflation has risen progressively in recent times. According to an estimate by Statistics Austria, the inflation rate in January was 5.1 per cent. It makes public life more expensive – the main driver of the price recently was increased energy costs – and reduces purchasing power.
Austrians have around 782 billion euros in private financial assets. According to the Oesterreichische Nationalbank, 27 billion are cash, 193 billion are deposits due on demand, and 95 billion euros are “other deposits’ ‘. It means that around 315 billion euros are lying around with practically no interest because deposits no longer bring any returns due to the zero-interest-rate policy. Therefore, if inflation and costs are subtracted, there is a loss of genuine interest and thus purchasing power. According to Wifo, annual inflation in Austria could rise to 3.1 per cent this year – the loss of purchasing power would then be around 9.5 billion euros.
Inflation protection for the small purse
There is often talk of protecting one’s money from inflation. But how does that work? And does it also work with a few thousand euros on the side or only if you are wealthy? “In principle, anything goes,” says Markus Kaller, securities expert at Erste Bank. However, he warns against using his entire capital for inflation protection. Instead, the nest egg – three months’ salary – should always be kept in reserve so that unforeseen expenses, such as in the case of a broken washing machine, do not become a challenge.
“Anyone who wants to achieve more income than on the savings account has to ask themselves what risk they can bear,” says Kaller because there is simply no such thing as a risk-free investment that brings more benefits than a savings account.
Real estate funds Investing in real estate funds gives you a good chance of protecting your money from inflation. “The income from these funds comes from rents that are adjusted for inflation,” explains Kaller. However, if interest rates rose, this would change the valuation of the properties held in the fund and make the fund more expensive. However, Kaller does not currently see a significant risk because there is currently a lot of liquidity on the market. “Real estate price increases can compensate for any interest rate risk,” explains the expert.
Gold The precious metal is in high demand whenever there is instability. Then the price per troy ounce (31.1 grams) also increases – the gold price is currently around 1800 dollars. According to Kaller, it is essential to think about the long term and to be able to withstand fluctuations when it comes to gold. Two or three Philharmoniker in a mixed portfolio would help to protect the value. In total, around ten to 15 pe rcent of what you can and want to invest should be held in gold.
According to the https://lnroute.com/, you can easily beat inflation with shares, but here, too, fluctuations are a companion. Since 2008, the markets have risen steadily, except for minor setbacks. Technology stocks, in particular, have driven the bull market recently, as titles from the home office, home entertainment or home sports sectors were in high demand due to the corona pandemic. It is now a question of carrying their profits into the future for these companies. There is currently disagreement among investors about whether this will succeed. That is why many tech stocks have recently been thrown out of the portfolios. “The smaller the purse, the less should be invested in individual stocks,” summarizes Kaller.
Mixed funds are a better start for investments in shares – even for small budgets. Many of these funds are available with different levels of risk, from shallow risk to progressive variants, in which investments are made in alternative investments in addition to shares. It is also possible to invest in funds, not via a one-off payment, but continuously via a savings plan. “Especially in times of fluctuating markets, saving with funds reduces risk,” explains Kaller, because people buy at different times. With this variant, investors with a small budget could also participate in the capital market and increase their investment over time.
Cryptocurrencies We hear again and again that investors are looking for inflation protection in Bitcoin and Co. However, it is risky for small investors as the prices of these digital units fluctuate enormously.