The economic uncertainty is the dominant note in the current panorama. Inflation stood in the month of April at a 8.3% year-on-year, 1.5% less than in March.
This figure is somewhat bittersweet since, despite the moderation in fuel and electricity prices and the clear containment intervention by the government, inflation underlying stood at 4.4% year-on-year, one point above the previous month, a figure that continues to support historically worrying figures. With these results, average inflation this year is already at 7.95%.
In short, it should be noted that inflation is especially affecting the Spanish economy. In fact, hotels, cafes and restaurants continue to be, with a rate of 5.8%, the most expensive services this past month, followed by leisure and culture, with a rate of 2.9%.
Other economic fields, such as saving or investmentare also being particularly affected by the revaluation of prices, a scenario that certain financial entities, such as Caixabank, see as risky, forecasting a 2023 with house price increases and industrial and durable goods, such as vehicles.
The intervention in the market after the results of inflation depends on the European Central Bank (ECB), which has already declared that it is preparing to raise interest rates from the second half of 2022, in July, and especially during 2023 Although this intervention is inevitable, it will be a key moment for the stock market, which has been trying to avoid another recession since 2008.
“To remedy the problem of inflation, monetary and fiscal policies must be developed that do not allow such disproportionate economic growth so that the monetary value does not suffer any depreciation”, declare sources from Deusto Training, a distance training center, “But that will notoriously hurt investors, and specifically savers,” Add.
When choosing the product in which to invest, it is important to look at the profitability that it offers, but also at the risk that the investor can assume, bearing in mind that higher profitability normally also entails greater risk. Factors such as the balance between savings and investment must also be taken into account, especially in periods of high inflation such as the current one. From the Deusto Training training center, they advise taking certain measures in the face of the situation of uncertainty that the stock market is going through:
1. Diversification
There are some types of investments that “protect” against inflation and help diversify portfolios, such as precious metals or real assets. There are also convertible bonds or the option to invest in shares directly.
2. Do not overinvest or overtrade
It is important to invest only the capital that is not needed, following for example the rule of 10% to invest and 4% to save. You only have to invest the money that is not essential and try to be persistent in the operations, since the entries and exits increase the cost of the operations and their commissions.
3. Let go of losses
It is important to hold out for as long as possible the moment of selling when the value of the share rises, but it is even more important to know how to withdraw them when their price falls. It is necessary to determine the risks that one is willing to take with each possible loss.
4. Follow an investment strategy
There are many asset funds, with a range of investments that allow access to all kinds of assets, such as real estate or companies, as well as shares and materials. The choice of a good risk management and a good investment policy will take into account the various external factors and will allow you to increase your assets despite them.
“The importance of controlling inflation is necessary to avoid a greater evil and those companies that are listed on the stock market must focus all their efforts on maintaining profits and offering a correct risk premium to investors.” sources from Deusto Formation affirm.
