The Best Way To Protect Your Wealth From Double-Digit Inflation

Risevest how to protect your funds from inflation
How to protect funds from inflation

Inflation is a reality that everyone has to deal with, and inflation is not always all that bad in an economy. What is bad is stubborn inflation. Inflation is stubborn when it is rising above the desired rate and all attempts by the people in charge – the CBN in Nigeria – to curtail it prove abortive.

In such an environment, it is only rational that we seek innovative ways to protect the value of our savings and investment. And in a way, one can say we are experiencing a version of stubborn inflation in Nigeria at the moment. So, what can you do to protect your wealth in such an environment?

Image from Nairalytics

There’s only one thing to do to protect oneself from either good inflation or stubborn inflation, and that is to invest your money in assets that will give you a return higher than the prevailing inflation rate. In present-day Nigeria, hardly will one find such an investment without incurring an additional risk that may be too much to bear. So what’s the way out?

Here’s an interesting twist to the inflation dynamics. Oftentimes, as inflation rises in a country, its currency also loses value against other global currencies. In other words, Naira tends to decline in value against the U.S. Dollar as inflation skyrockets.

With that knowledge comes another way to protect your wealth in such an environment; investing in dollar-denominated assets.

The premise is simple. If today, Naira exchanges for a dollar at N400/USD, and tomorrow it exchanges for N450/USD, then you will be better off holding the dollar than holding Naira. That’s one part.

The other part is for you to invest the dollar in an asset that produces positive ROI instead of just holding the dollar. Doing so exposes you to double upsides that will allow you to potentially protect your wealth from inflation that is whipping away your purchasing power. The first upside is what you gain if Naira continues to lose value against the dollar. And the second is the return you gain from simply investing in a dollar asset. 

The thing is that we have seen this play out just exactly like that in the last year since we started Risevest. This is why we started Risevest, to help you, your friends and your family protect yourselves from wealth-eroding inflation like what’s prevalent in Nigeria. 

In 2020, the inflation rate in Nigeria was 13.25%. At the beginning of the year, a dollar was exchanged for N350/USD. At the end of the year, our stock plan returned 40.77% in dollar terms. By the end of the year, Dollar to Naira was exchanging around 490. Bringing the effective Naira return in that year to more than 80%. A clear inflation-beating return.

Prioritizing the protection of your wealth is your responsibility. And with tools like what Risevest has provided through its platform, you have no reason not to act immediately on this task. Protect your wealth.