Did you know that there’s only one way to beat inflation?
That’s through investing your money so that it grows over time. But if you’re keeping your money safe in your piggy bank at home, over time that money would actually be worth less than when you first dropped it in the piggy bank.
Inflation is the inevitable reality where costs of goods and services increase as time goes on, thus limiting the purchasing power of the money you currently own. Hanggang saan aabot ang 20 pesos mo? Well, in a few years, not very far.
Investing in the stock market is one of those smart ways to invest your money to beat inflation because stocks outpace inflation, thus protecting your investment from the risk of inflation. Based on historical data, stocks have consistently delivered higher returns that exceed inflation. The Philippine Stock exchange index has shown an average growth rate of 7.5% per year since 1988.
Why does it beat inflation?
- It’s simple, you own a portion of a real company, with real products and services, manned by real human beings. None of it is fake or imaginary. Therefore, as economies grow over time, so do the businesses and the companies you bought shares from.
- Stocks beat inflation because, to account for the rise in costs, those companies increase their prices. Often, companies pass on this increase in cost to the consumers by increasing their prices over time.
The stock market has shown the wonderful magic of compound interest to those who invest in it. This is why it’s smart to invest consistently and for long periods.
Inflation is inevitable, but losing to it isn’t. Learn to invest and grow your money today so that even your 20 pesos now can push you forward in the future.