Inflation and its prospects
Things look bleak, and not just at the supermarket checkout and gas station. With a current inflation rate of over 7.3%, we can practically watch our hard-saved wealth shrink. What was a small luxury yesterday can be prohibitively expensive today.
After more than two years of a pandemic, a European conflict and a vaccination marathon, we are now facing the next catastrophe. Goods and services are becoming more and more expensive. Gasoline and energy are unaffordable and reserves for old age or larger investments are melting away with each passing day. If inflation persists, there is even a risk of damage to the economy in the long term. Experts believe that the current situation is not just one of classic inflation, but one can speak of so-called stagflation. A neologism from the 1970s, when people were also concerned about economic growth, a rapid rise in prices and a constantly high unemployment rate.
Unpleasant times for the land of savings books and conservative investors. Instead of interest and compound interest, which have been below the rate of inflation for years, even more bitter times now await us. Lucky are those who have diversified their assets and have already got their flocks in the dry before the pandemic.
What means inflation
Inflation is a percentage change in the price situation on the free market. To measure these, a fictitious shopping basket is used as a reference, containing a cross-section of shopper behavior and types of goods. If prices rise disproportionately (2% inflation is desired by the economy) while interest rates are low or even falling, this is called inflation. In this context, changes in the price structure of services, consumer goods and food must occur in equal measure, with the effect that the purchasing power of a single euro decreases. Inflation, even supposedly low, can be perceived by the population as significantly stronger, especially in poor economic conditions. This “perceived inflation” can deviate greatly from the real nominal value.
How to protect your assets from inflation
- Spread your assets and investments
- Time is money: plan for the long term
- Invest parts of your capital in investments with stable value
- Consider internationalizing your assets
How we advise you on the subject of inflation:
- Legal and tax planning for asset protection
- Analysis of existing investment forms and evaluation
- Examination of the legal security of installations at home and abroad
- Strategy for building upinflation-proof fixed assets
- Legal assistance in the event of incorrect advice on the subject of inflation protection
Helpful articles on asset protection & inflation:
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About the author
PhD, MBA, MM
Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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