The Best Hedge Against Inflation

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The Best Hedge Against Inflation 2021

What is the Best Hedge Against Inflation 2021? Anyone who is old enough to remember the earth shaking effects of the Global Financial Crisis back in 2007-2008 will know that the world never went back to how it was before.

The Central Banks of the great economies of the developed world, such as the United States and United Kingdom, were forced to undertake fairly drastic and completely unprecedented actions in an attempt to steady the ship.

In most instances, this involved the Central Banks reducing interest rates down to levels never seen before, and in some cases these went to below 0%! However, this was not the only drastic action that was taken by the various Governments from around the world.

In addition to incentivising people taking out cheap loans in order to stimulate the economy, there were also widespread money printing programs which swept the developed world, in effect, printing money and attempting to redistribute it throughout the economy in order to prevent it from grinding to a halt.

This tended to work on a short term time frame, however, over a prolonged period, when it comes to the economy… eventually you are going to have to pay the piper. And that time is now.

The problem with increased inflation is; that if Inflation increases unchecked the cost of simply living and being to go to the shop and buy simple daily necessities such as a carton of milk or a loaf of bread becomes very unstable. One only need to look at far as countries in the developing world such as Zimbabwe or Venezuela where inflation is currently 2720%!

Anecdotal reports claim that in an economy where inflation has run to such an extent, the price of a carton of milk can change between when it is put on the shelf in the morning and when it is sold a few hours later.

Don’t forget to brush up on Fundamental Economic Analysis with our post 10 Fundamental Analysis Indicators For Defensive Trading.

What Is Best Hedge Against Inflation 2021?

When it comes to the Best Hedge Against Inflation 2021, forewarned is forearmed. That’s why you are reading this! When you think about it logically, it makes perfect sense. The best way to get prepared for any forthcoming economic instability is to follow these simple (and logical) steps:

Eliminate High Interest Debt:

No matter what you think you need, you can live off about a third of it. I’m serious. Make sure you are prepared by eliminating any unnecessary monthly expenses and make sure you reduce any outstanding debt that you are liable for. There are two main reasons that you want to do this.

One, is because when the Central Banks are forced to increase interest rates, this means that the percentage of interest repayment that you are obligated to make on your outstanding debt will, quite possibly double in the space of a few months. This could be enough to literally bankrupt many people, depending on the total outstanding amount owing.

Two, because any additional cash you are repaying to a third party is money that you are taking away from the next steps in the preparation process.

Diversify Income Stream to Generate Additional Cash:

This is a lot easier said than done unfortunately. Find ways to generate additional income is one of the holy grail pursuits these days with everyone and his dog having a bright idea of how you can go about doing that. It seems like everyone is into e-commerce, amazon selling, youtubing or tiktoking.

Ultimately, you know your skillset the best and you know what kind of time you have available to you in order to seek out additional capital. It is worth considering, however, that perhaps you do have a skill that could be capitalised upon in order to generate an additional income stream.

Build A Safety Net of Cash Set Aside:

This is really the ultimate step in the entire process and the reason that you need to do this as soon as possible is because of the following point. Having capital available to you is the only way that you are going to be able to jump into the market and scoop up whatever asset it is that you see on discount during the next recession or even market crash.

No matter if you are into Property investing or Stock Market investing. If there is an economic crisis on the horizon, then there is going to be an opportunity for you to swoop in and scoop up a bargain that heavily discounted. Depending on your age and life goals, that could be the best opportunity to come your way for the rest of you life. You don’t want to miss that.

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What Is The Best Way To Invest During A Recession?

If you have completed these steps, then you are in the best position to truly take advantage of any recession or market crash.

If you think about it logically, if people are losing their jobs, money in the economy is drying up, interest rates are increasing and making everyone’s mortgage and debts more expensive than they were before – there isn’t going to be a sentiment of abundance in the air.

People are going to be ‘tightening the belt’ and making sure that their lives are secure financially. This means that the time for Stock Market speculation and high risk investments will be at an all time low. People are going to want to be sure of their financial position and security.

This is where you who has capital set aside has a once in a lifetime opportunity. Imagine you were able to buy incredible assets at a fraction of the price because panic in the market and necessary selling of assets has created the opportunity for you to buy quality property, stocks and cryptocurrencies for pennies on the dollar.

That is the true gift of an Economic Crisis to those who are prepared. Thanks for reading Best Hedge Against Inflation 2021.

For more on Recession Stocks, check out out article 9 Recession Stocks That Could Explode In 2021.

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As always, if you have any questions, we would love to hear from you. Please contact us. Happy trading!

Defensive Trading

Defensive Trading

Defensive Trading has been established by traders and investors with experience in Forex, Cryptoassets, Stocks and Options. They are the epitome of Defensive Traders and prefers quality trades over a quantity.

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