The top headlines in most newspapers these days are high inflation rates. Most countries are experiencing historically high inflation rates. Causes of inflation rates are because of commodities prices like rice, flour and most importantly oil.
Usually if inflation is caused by commodities, the poor and middle level income would be greatly affected. In Singapore, inflation rates are predicted to be between 5-6%. Such rates would greatly erode the purchasing power of your deposits, even if it is left in a fixed deposit which is earning between 1-2%.
Commodities like all other investment tools are subject to business cycles, thus it is important to take that in your consideration when planning your personal finances. To beat inflation and ensure that your retirement nest egg, it is important that you keep your money invested in the relevant investment tools. Which tool is relevant depends on your investment horizon.
For the immediate reality, it is very important to plan your budget carefully. Have records of your household expenditure for the month. Such records would inform you which are experience the highest inflation.
At the end of the month, when planning your budget, have a look at which area of expenditure would have increased greatly, in this case, would be your food expenditure. Have a closer look at this area and see what changes you can make to bring the expenditure down.
In the long run, try to build another source of income, preferably passive source or increase your financial literacy level and start investing.
For more information on Planning your Budget, please click here.
For more information on Investment tool, please click here.
The Merger Dividend - July/August 2011
13 years ago
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