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Can you make a smart investment even with inflation?

By SIMCA Desarrollos


Lately, everyone has been talking about inflation, generating a collective concern about the loss of purchasing power. However, even with in the face of this potential danger, you can make a smart investment and get high returns.

In order to see things with a better perspective, we first need to understand what inflation is and how it affects us:


Understanding inflation


According to Banco de Mexico, Mexico's central bank, inflation is a phenomenon related to the disorderly increase in prices for most goods and services that are traded in their markets for an extended period of time. When faced with inflation, we realize that the amount of money we have is no longer enough for us to purchase the same goods, or in the same amount, as before.

Despite how difficult this situation can be for the economy, there are ways in which you can give new value to your money and protect it from economic downturns. But first, you need to know when, how, and where to invest.


When is the best time to invest?


Inflation is one of the first factors you should pay attention to before investing. If the returns that an investment can give us grow at a slower pace than the increase in prices, you will be losing money; if, on the contrary, the returns of a market or product grow faster than inflation, then you will make a profit.

For example, at the moment in Mexico, there is an appreciation of housing above inflation. This means that the value of properties will increase over time, so buying property at presale prices allows for the capital you invested to remain the same or even grow thanks to capital gain (and, in a way, also thanks to inflation).

In times of economic uncertainty, new opportunities that help you protect your money are always coming up.


Making smart investments 


To make a smart investment, you have to be familiar with the different financial resources available and know which of them can yield the best returns. Some financial instruments that you can invest in are: 

  • Stocks: Investing in stock exchange listed companies can be beneficial if their products' prices are increasing, as this will translate into better profit prospects and greater gains for the value of the stock. The one disadvantage is the volatility of the stock market.
  • Real estate: Investing in real estate will always be a wise decision, because although prices rise, so does the value of your property and, therefore, you will have higher returns in the medium and long term.
  • Commodities: Commodities are a good option at times when inflation is high, since there is usually an increase in the price of raw materials.

There are still other financial instruments; but the best investment always use to be the Real Estate investment. If you want to know how and where to invest in Mexico, check our website and find out for the best Real Estate opportunities in the Mayan Riviera.


You might be interested in: Investing in property: Where should I place my money?


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