What to do during a hyperinflation.
How can you maximise your position during a hyperinflation? Nathan says investing in different asset classes can help to hedge against a dying dollar.
What will cause hyperinflation?
According to Nathan, the economy has been getting weaker and weaker over the last ten years.
With rates likely to turn negative, cash is set to lose its allure. Since it will cost money to hold money in the bank, the risk of bank runs will increase.
This will also mean people will be more likely to spend their money rather than save it.
While this may help to keep the economy going, it may also lead to hyperinflation – where the dollar rapidly loses its buying power and assets get more and more expensive.
How will this affect us?
While some people won’t really feel the effects of this, others who are poorly positioned are likely to get slaughtered.
But, there will also be winners – these will be the people, such as Nathan and his clients, who are able to take advantage of opportunities to profit during this time.
Nathan says he is excited by this – but also nervous. He has never been through a hyperinflation before and can only look at other countries to see its effects.
What often happens, he says, is that a lot of people become poor and this creates a depression.
How can we protect ourselves?
In order to maximise our position coming into a hyperinflation, Nathan says it is important to be wise with our investing.
He says those who have the right amount of debt attached to income producing assets will be well off.
He uses property to hedge against inflation because it is an income producing asset. But, he also invests in cryptocurrency and precious metals.
He isn’t currently invested in the stock market because he thinks it is overvalued at the moment. But, he will invest in shares again when the time and price are right.
Things to consider.
Cashflow is king, says Nathan. He says it is important to make sure your cashflow is in check and that you can keep increasing it throughout this system.
He also says that keeping expenses lower can help you to streamline your position and that investing in the right vehicles is key.
Debt is a good thing in this type of economy because it allows you to leverage yourself to accumulate assets that will go up quickly in an inflated environment.
Rental income from investment properties will also be subject to inflation, making it quicker to repay the old world debt that purchased it.
Which is why property is such a good vehicle to hedge against inflation. Not only does it allow you to create wealth, it also helps you to increase this wealth as time goes by – all while earning an ever rising income.
How will you be positioned during a hyperinflation? Please share your experiences in the comments section below.