Inflation is the real monster

The balance to Inflation

Years ago, my family had this Sunday ritual. It was an unwritten law known to everyone at home. Once dad is through with the first set of visitors in the morning, we are set for the market and afterward, church. The mantle for the errand falls on the youngest child and the three items we bought a week in, and a week out were soap, milk, and sardine. Then, the worth of one Sardine (always “Titus” unless you want to see war) was around N120. ( I know because na me dey buy am)

Some months ago, Fosudo Fisayo tweeted Sardine now sells for N675, the same product he bought for N300 this year. The truth of the matter is, that you cannot turn a deaf ear to the shout of inflation. Same currency, same notes but reduced value.

I am a firm believer in the fact that inflation, not currency devaluation, is the true monster. In an ideal system, foreign exchange will have little or no effect on a country that produces more than 70% of what it consumes and have enough to export the same.  Nigerians spend more than 65% of their income on food and 17% of the total imports are food related. Therefore, the goal of beating inflation and currency depreciation is…( exactly, you got it)

I have seen people make a lot of investment mistakes due to the pressure to beat inflation. While this is nice and truly the right thing to do, it leads to an uncontrolled desire for immediate wealth. Stay with me, I am trying to create a balance between using inflation as a tool to measure returns and the wild drive to amass instant wealth because inflation is stealing from you.

You must learn to re-adjust your focus. As I wrote to you last week (sounding like Paul now), fixed investment asset does not have variable returns nor does not volatile asset have fixed returns. Also, the high risk does not necessarily equate to high returns nor is low risk synonymous with low returns.

I have shattered your belief system. I know! The risk, not the returns should be the first focus. Inflation increases the risks of any investment. Beloved, by the mercies of God, looks at the risk and return of an investment from the lens of inflation, amongst other things. For example, when inflation rises, speculation in the stock market leads to massive price volatility. In the short run, it is an inverse relationship as the revenue of companies tends to reduce. In the long run, it is beneficial because companies adjust, and revenue increases.

Cheers to a profitable lifestyle,

TL.