Inflation is constantly eating away at your assets. One euro today is no longer worth the same tomorrow. To protect the value of your assets, it is necessary to invest in forms of investment that at least exceed the rate of inflation. This could include, for example, real estate, shares or other asset classes that have historically achieved a positive return above the rate of inflation.
Inflation can also affect your tax situation. If your assets are growing but not fast enough to keep up with inflation, you could have less purchasing power in real terms but still pay higher taxes on your 'gains'. It's important to consider tax-efficient investment strategies and keep up to date with tax changes on a regular basis.
Ongoing inflation can significantly reduce the purchasing power of your pension income. It is therefore important that you have a pension strategy that makes adjustments for inflation, whether through inflation-linked pension products or other investments that aim to outpace inflation.
The best way to provide for inflation is to diversify your portfolio. This means spreading your capital across different asset classes to hedge against market fluctuations and inflationary trends.
Commodities and precious metals: Historically, gold and other precious metals have often proven to be reliable inflation hedges. Commodities such as oil or agricultural goods can also play a role in a diversified portfolio.
Real estate: Investing directly in real estate or indirectly through real estate funds can also help to protect assets against inflation. Rents and property values can rise with inflation and therefore offer a degree of protection.
Equities: Although share prices can be volatile, companies offer the opportunity to adjust their prices in line with inflation and thus achieve real returns in the long term.
Securities, particularly inflation-linked bonds, can be a useful addition to a diversified portfolio. They generally offer an interest rate that is above the inflation rate and thus help to maintain purchasing power. In addition, corporate bonds or government bonds from countries with stable economies and low inflation can also be considered.
Inflation may be inevitable, but that doesn't mean you have to sit idly by and watch your hard-earned wealth dwindle. Through careful planning, diversification and choosing the right asset classes, you can protect your wealth and ensure that it continues to grow despite inflation. It is always advisable to seek professional advice to ensure you make the right decisions for your individual situation.
In a world characterized by financial issues and uncertainty, the Zwei Wealth office provides clarity and support. With extensive expertise and a holistic approach, we enable you to embark on your financial future with confidence. Please do not hesitate to contact us if you have any further questions or would like a personal consultation.