Last Updated on June 7, 2023
Investing one thousand USD in this time of inflation may sound off to many of you. However, here is why it isn’t: According to the World Economic Outlook, global inflation is said to have increased from 4.7% in 2021 to 8.8% in 2022. Yes, we are all tired of the economy right now, and we cannot wait for it to get better. But while we do that, we have to learn that, just leaving your money in savings, is not the wisest thing. Investing during this inflation is the way to go. Considering how the currency keeps crashing these days? Whew! We will need to check it before it checks us.
This is why many experts recommend investing during periods of high inflation. The loss of purchasing power as a consumer during inflation invariably means that certain investments perform well during the same period. Commodities like gold and petroleum tend to fare well during inflation, and consumer staple stocks and real estate also have a good track record during inflation, so the bottom line is: to be sure to invest in assets designed to hedge against inflation.
Since it is clear that investing is the single way to stay rich, or better yet, to stay away from bankruptcy, Here are four simple ways we would profitably divide and invest 1,000 USD during this time of inflation:
1. Low-Risk Investment Options
Yes, all investment options that exist have risks, is there anything good in life that doesn’t? Anyway, low-risk investment options as it is said, are investment opportunities that carry very few risks, which is to say the chances of you losing your money and returns are slight. However, the returns that come in with low-risk investments can be low.
Every good investment junkie knows that to succeed in investments, you need to know where to put your money, by figuring out how big the risks are and where they lie. This is why low-risk investment options exist, they serve as what we like to call “security blankets”, so no matter how daring we may choose to get, we still have a sense of security out there. This is why we would invest 50% of 1000 USD during this inflation in a low-risk investment option. Here are a few low-risk investment options we would recommend:
- Treasury Bonds
Government bonds are short-term investment vehicles issued by CBN and are backed by the full trust and credit of the government. Duration is 3 months to 1 year. They are considered one of the safest investments on the market. As a result, they offer relatively low-interest rates to investors compared to higher-risk but higher-yield securities such as stocks and corporate bonds.
- TIPS
TIPS (Treasury Inflation-Protected Securities) are low-risk investments that can offer high returns. They are immensely backed by the United States government, so they are safe and have little risk of default or bankruptcy. These securities are also inflation-compensated. This allows your money to keep up with the rising cost of living and maintains your purchasing power no matter how expensive things get.
As long as there is inflation and people are still using dollars to buy things (there will always be at least some inflation), TIPS will continue to pay interest on the value of capital. This means that even if prices rise by 10% next year, your money will still be worth more than before. Investments are increasing because they are dealing with inflation.
Read: What is Asset Allocation and How to Apply It
2. Medium Risk Individual Stocks
To put it simply, once you invest in an individual stock, you are automatically purchasing ownership. This happens when a company, either in its bid to grow or expand, or even raise capital decides to go public. These days shares can easily be bought and sold, electronically or through an exchange.
You can make your money through the company’s dividends, or through the price appreciation of the stock. This is also a good option because only about 14% of the population in the US invests in individual stocks. This is why we would invest 20% of our 1000 USD in these times of inflation.
Medium risks individual stocks we are always on the lookout for are;
Amazon
Yes, you heard right! Amazon!. Amazon does not need a pickup pitch for a good number of people. The corporation has a dominant lead withinside the U.S. e-trade marketplace with about $six hundred billion in gross products income remaining year, and its Amazon Web Services cloud platform is likewise a marketplace leader.
However, extra increase ability exists than you would possibly think. We’re an extended manner from maximizing e-trade adoption; it nevertheless debts for much less than 15% of all U.S. retail income. The cloud enterprise is enormously younger as well. Amazon additionally has a ton of ability in different regions which includes healthcare, grocery stores, community markets, and extra.
Shopify
This has to be one of the most popular e-commerce sites. Shopify is a platform that enables businesses of all sizes to sell their products online, with a particular focus on empowering small businesses and building and growing long-term relationships.
Shopify’s “one-stop-shop” approach to e-commerce makes them a force to be reckoned with. Today, more e-commerce sales flow through the ecosystem than any company other than Amazon. However, Shopify may just be getting started. Over the past four quarters, it has had sales exceeding $5 billion. Yet this is just a fraction of the estimated $153 billion market opportunity (and growing).
E-commerce is still in its relatively early stages, accounting for less than 15% of his US retail sales. Shopify also has its second-largest market share, leading many of the world’s largest retailers by a large margin. They appear to be the clear choice as the best stock to buy in 2022. As stocks plummeted in the recent market downturn due to recession fears and signs of slowing consumer spending.
Pinterest is an oasis of positivity in an increasingly depressing and fragmented social media landscape. This comes in part from the idea that Pinterest is all about.
People come to Pinterest to focus on things and not other people. Whether you’re building a dream deck, baking your child’s birthday cake, or updating your wardrobe. Pinterest visually inspires people to do whatever they want.
Pinterest crushed by 2022 market drop. The restrictions that came with the pandemic were lifted, and it caused the user base to shrink. However, according to the company’s recent results, the user base appears to be stable for the time being. Also, Pinterest has only a fraction of its Facebook user base, so there is still plenty of potential for long-term user growth.
What is most exciting from a long-term investor’s perspective is that Pinterest presents a huge opportunity when it comes to user monetization, especially as the company shifts away from the traditional ad-centric model and explores Z-commerce methods. With this, would you advise anyone to invest 1000 USD in these times of inflation?
A pivot point certainly makes sense. Pinterest is where people search for things to buy, and it recently hired e-commerce veteran Bill Ready as its new CEO to accelerate that swing. It may be a while before the company realizes the potential of e-commerce, but long-term investors could be well rewarded.
It’s very easy to imagine how seamless advertising, lead generation, and product placement would be if people were already out there asking for suggestions. The monetization potential is particularly strong internationally, with 80% of the user base, but only a small fraction of the revenue.
3. Medium Risks (ETFs)
For investors not too familiar with ETFs, let’s break it down a little.
ETFs are very similar to mutual funds, but there are some notable differences. Similar to mutual funds, ETFs invest in a variety of securities, automatically providing diversification to shareholders. Investors are entitled to purchase shares in the ETF and receive a proportionate share of their total value. Rather than purchasing shares in a single share.
However, unlike mutual funds, ETFs trade on the open market just like stocks and bonds. Mutual fund shares can only be exchanged directly with the fund, but ETF shareholders can buy or sell ETF shares at their discretion.
ETFs are a popular investment because they are relatively cheap and easy to buy and sell. In addition, they have lower fees than other forms of investment. They are more transparent and more tax efficient than comparable investment funds. With this knowledge, we would invest 20% of 1000 USD into ETFs in these times of inflation.
4. High-Risk Investment (Crypto)
Surely, some of you would say we left the best for last. Because how would we talk about investing 1000 USD in times of inflation without adding crypto to the list? For our Crypto newbies How about we start with a little background?
Cryptocurrencies are digital currencies that can be used and traded to purchase goods and services. Governments do not issue cryptocurrencies. They are decentralized. Also, they are not overseen by any country or government top bank. The most widely used cryptocurrency is Bitcoin, launched in 2009. Cryptocurrencies have developed rapidly and are used all over the world today.
We are left with 10% of our investment cash, and we would gladly be investing in any of the crypto coins, we have carefully considered. Here are a few reasons why;
The main advantage is that parties can transfer money between themselves without an intermediary (bank). Communication between parties is secure because of the use of public and private keys. Processors receive a reward called proof of work. Transfers are fast and cost minimal.
Cryptocurrencies are volatile vehicles that go up and down in price. These fluctuations allow investors to make huge profits. However, this volatility can also result in large losses.
Cryptocurrencies are a new investment vehicle and people are still studying how investing in cryptocurrencies works. Therefore, the potential to generate good returns is unknown. However, this learning phase offers the savvy investor the opportunity to buy cheaply and sell profitably.
Another advantage is that it is virtual. It is also easy to hold and move around the world, and the country’s economy does not affect its price in the market. Unlike dollars and pounds, which vary in value depending on the country of issue.
Conclusion
Investment is truly not for the faint of heart, but for those who are willing to change their financial status or just want to maintain it. This is how we would invest 1000 USD in times of inflation. What do you think? Would you be investing this way? Or would you do something different? Let us know.
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