Tuesday, March 5, 2024

How to defend dangerous savings

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We needed the war just to complicate this difficult exit from the Covid pandemic. This is a powerful sentiment that spreads among the people, but also among the insiders.

It now looks like an exit from Covid is close and Italians have been preparing to breathe a sigh of relief from rumors of an impending recovery. But now no one is talking about recovery and the only topic is inflation. Confesercenti fears the percentage could be as high as 6%. Which could lead to a decrease in consumption by 4 billion.

Meanwhile, commodities are accelerating and the purchasing power of the currency is decreasing day by day. A truly bleak scenario no one would have imagined just a few months ago. The ongoing crisis in Ukraine did the rest. Commodities rise more Italians wonder how to protect their savings from ever-increasing inflation. The preferred choice of Italians is postal savings bonds.

Interest-earning bonds, but not only

These are simple products to subscribe and understand, the money is protected by the state And while the benefits aren’t very high, they still allow for some defense against inflation. It is definitely better to avoid complex instruments with high volatility such as Bitcoin and cryptocurrencies. Until a few months ago, Bitcoins were recommended as a potential safe asset in the event of inflation, but today no one talks about them in those terms anymore. The reason is simple: for months they began to lose their color precisely on the occasion of the Ukrainian attack, and instead of increasing as gold did, they collapsed even more.

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Other useful and dangerous tools

Inflation-linked bonds can be a good tool. Inflation-linked bonds are issued by different states and offer interest proportional to the inflation measured in that state, so it’s definitely a tool to watch. But consumer protection associations warn. Banks and financial institutions of various kinds in this period offer shelter investments of many types. Before subscribing to this type of tool, it is necessary to think carefully.

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Stunning promises of inflation-tolerant interests are not necessarily followed by facts. It is also advisable to avoid tools that predict the rise of commodities. It is true that the raw materials are increasing, but it is also true that they are highly volatile and this kind of highly complex speculation should be left to those who are already competent.

Wynne Dinwiddie
Wynne Dinwiddie
"Infuriatingly humble alcohol fanatic. Unapologetic beer practitioner. Analyst."
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