Co-CEO, leading GrowthDecember 12, 2022

4 ways to fight inflation by positioning your savings strategically

Inflation can have a serious impact on savings. Here are four smart ways to protect your savings for the future.

4 ways to fight inflation by positioning your savings strategically

A note: Please kindly note that Cenoa does not provide investment, tax, legal or accounting advice; and this material has been prepared for informational purposes only. You should consult your own advisors before engaging in any transaction. You can find detailed disclaimers on Cenoa’s website. 

Economic instability is just one of the compounding challenges being faced by the majority of the world right now. Whether you’re looking to save for a down payment for a home, or for retirement, or if you’re just looking for small ways to grow your wealth in the face of inflation — here are a few ways to strategically invest your savings. 

What’s the current inflation rate?

We are currently still in an inflation crisis that started in 2021, kicked off by supply chain challenges related to COVID-19 and exacerbated by the crisis between Russia and Ukraine.

The current inflation rate in the United States is 7.7%. Ten years ago, in October 2012, the inflation rate was only 1.7%. The average U.S. consumer is feeling the pinch: For example, groceries have increased in cost by over 11% in the past year. This is the largest cost increase since May 1979. 

Globally, things are just as bad — or much worse. Nine countries, including Zimbabwe (255%), Lebanon (158%), and Venezuela (156%), are in a state of hyperinflation, which means inflation percentages exceed 50%. 

The average inflation rate around the world is expected to reach 7.4% this year, which is the highest increase since 1996.

The impacts of inflation on saving

Savings don’t go as far 

Inflation means everything is more expensive, so the money that you’ve saved so far can’t get you as much as it could have last year — or five years ago. 

People can’t afford to save as much

Because the cost of living continues to go up so drastically, everyday people all over the world are spending more money to get by and pay for their day-to-day expenses like rent, food, and gas. The amount they’re able to save has gone down — and people are dipping into their emergency funds and savings accounts to cover daily and unexpected expenses.

Wages aren’t keeping up with inflation, leading to stagnation and more poverty 

The current economic situation has pushed many people’s finances beyond the brink. “Everywhere you turn, prices are rising, but wages aren’t keeping up,” said Meredith Greif, an assistant professor at Johns Hopkins University, to The Washington Post

4 ways to fight inflation with smart investing

Many people are reconsidering their saving strategies in the face of instability and crushing inflation. Here are three ways you can experiment with to try and protect your savings from inflation.

1. Invest your savings strategically

Please note that all savings come with loss risks, and these are just suggestions. Start small and consult with local experts on regulations and best practices for savings in your current financial situation, understand the risks associated with blockchain technology.

2. Inflation hedging with gold

Inflation hedging is investing in ways that tend to maintain or increase in value even during cycles of inflation

It sounds old-fashioned, but investing in gold, or gold-related mutual funds, has long been a relatively safe way to try investment hedging. The cost of gold does fluctuate a lot, but it tends to trend upwards, according to Forbes. It is generally not recommended to put all of your savings into gold-related investments, but they might be a part of your diverse portfolio.

3. Try fintechs, like Cenoa Superwallet 

Cenoa is a superwallet, neither bank nor financial institution, that allows you to see higher yields on your savings without having to pay fees, in principle. This superwallet gives users a chance to earn up to 5% yield on digital dollars, which is much higher than traditional banks’ high-yield savings accounts that usually offer almost no yield. This means you’ll see gains more quickly, even if you start small and deposit a little at a time.

The Cenoa Superwallet holds your funds as stablecoins which are always on par with digital dollars — a currency that enjoys a much greater degree of stability than many others around the world. Because of this, Cenoa’s system can help you fight local currency devaluation on your own. 

4. Invest in safe mutual funds for the long term 

The most important way to protect your savings is investing in a diversified portfolio. Index funds like the S&P 500 have been shown to be a reliable long-term investment to help protect your financial future.