SAVING AND INVESTMENT TIPS WHEN CURRENCIES KEEP LOSING VALUE: HOW TO SURVIVE CURRENCY INSTABILITY

Many countries have been experiencing currency devaluation over the past years. Currencies have been unstable and experiencing fluctuations affecting both savings and investments in different countries. Currencies fluctuate due to floating exchange rates, whereby changes in exchange rates result from poor economic performance, inflation, differentials in interest rates, and capital flow. Currency devaluation denotes the downward movement of a country’s value of money against a standard or a stable currency. It leads to an increase in the price of goods and services, erasing the purchasing power. The following saving and investment tips can be put in place during currency devaluation.

· Diversifying assets

· Investing in precious metals

· Investing in real estate and real assets

· Regularly reviewing investments

· Holding assets in stable currencies

· Reducing or repaying high-interest loans and debts

· Considering cryptocurrency

Diversifying assets

Diversifying assets means investing in different assets such as stocks, real estate, bonds, and securities. This protects the investor against the effects of devaluation and loss on the portfolio since when one asset performs poorly, the gains from another investment can cover the losses.

Investing in precious metals

Precious metals such as silver and gold were previously used as a value store. These metals can still be used during devaluation to protect savings and preserve purchasing power since their value increases as paper money loses value.

Investing in real estate and real assets

Investments in real estate can protect investors against currency devaluation because, unlike other assets whose value depreciates over time, their value appreciates over time. They are, therefore, efficient in preserving value when currencies lose value.

Regularly reviewing your investments

It is essential to keep an eye on your investment portfolio in times of currency devaluation. This ensures the investor is able to make the needed adjustments on time and rebalance to maintain a stable and diversified portfolio.

Holding assets in stable currencies

It is possible to lose asset value when currencies are unstable and keep losing value. Hence, it is wise to hold assets in other stable currencies or assets denominated in those currencies to avoid losses.

Repaying or reducing high-interest loans and debts

High-interest debts become more expensive during currency devaluation because the repayable interests become exceptionally high. It is, therefore, advisable to repay or reduce those loans to reduce the cost of debt.

Considering cryptocurrencies

Cryptocurrencies such as bitcoins might be an option to hedge against the devaluation. However, it is essential to consider that they are highly volatile and might lead to asset losses.

All the above tips can be essential during currency devaluation. However, they might not be uniformly applicable because their success in applicability highly depends on the impact of the devaluation, which varies depending on factors such as government policies, economic stability, and inflation rates.