Inflation is the rate at which prices of goods are rising. If you visited the market at the start of the month, you could bet you won’t buy those goods at the same price. When you think back to the prices of goods in the market in January 2022, virtually nothing costs the same in September 2022. The rate of inflation in January this year was 15.6% by August, it rose to 20.52% (God save us).

Food, fuel, and energy are the main drivers behind increases in the cost of living. In addition to an increase in demand after the pandemic, supply chain delays, and the war in Ukraine. The worsening insecurity in Nigeria continues to hinder farming activities and discourage agricultural investments in key crop-growing states while putting existing agricultural businesses in constant peril.

Now that you know what causes inflation, how can you grow your money and protect the value from being entirely eroded by the rising inflation? Here are a few tips:

1. Stocks: Stocks generally offer a haven during inflationary times. They serve as a long-term inflation hedge but can suffer inflation spikes in the short term. Some stocks historically tend to do better at producing total returns that exceed inflation such as shares from consumer staples, and financial and energy companies. Other industries experiencing growth now are those rebounding post-pandemic such as travel, leisure, and hospitality. See how to buy stocks in Nigeria here.
2. Short-term bonds: Bonds are debt instruments and represent loans made to the issuer, governments. Corporations often use bonds to borrow money. Saving your money in short-term bonds is like keeping your money in a savings account but with higher interest rates. Short-term bonds are more resilient than long-term bonds which can suffer losses. With short-term bonds your money is safe and accessible, they will be affected less if interest rates begin to rise quickly.
3. Real Estate: Real estate usually does well in times of higher inflation, as the value of the property can increase. It is important to note though that in the post-pandemic era, the demand for commercial real estates, such as office and retail spaces, is still suspended as more and more companies are adopting remote work or hybrid models. Real estate properties such as residential, industrial, and raw land may be doing better now and are more considered.
4. Commodities: These are raw materials or agricultural products that can be traded. Common examples are gold, oil, grain, natural gas, beef, and even coffee. As these commodities are crucial to everyday life, investors see the value in owning and trading them. Commodities are some of the most powerful investments to hedge against unexpected inflation. It is important to note, however, that commodities can also be extremely risky as their prices depend largely on demand and supply, which can be highly unpredictable. The chance of rewards is high, but so are risks of losses.
5. Gold: Even though gold is also a commodity as discussed above, it deserves special mention as it’s a very real asset that tends to hold its value well. It may not be perfect, but it can be a stable asset to have as part of a diversified portfolio as inflation gets out of hand.