Inflation and currency depreciation is a real concern these days and I have noticed and felt the difference just in the last 18 months when travelling to the UK and around Europe. The purchasing power that we had is slowly being eroded away and we have to find ways to hold on to what we have or our real worth value is diminishing continuously.
I mentioned in an article with a friends mother who had $2 million sitting in a bank account and his worries that this was losing real world value. These are genuine concerns and why we cannot afford to let money sit whilst earning minimum or no returns.
Inflation is something that you do not notice immediately and is more noticeable over time. This does depend on where you live around the world at what rates apply to any particular country. The IMF expects Venezuela to see inflation at a rate of 549% in 2025 which is alarmingly high and there is very little you can do to fight this.
The problem with holding local currencies is not only the inflation, but the currency depreciation. The US Dollar from 2005 -2025 depreciated by around 2.65% per annum so $100K in 2005 would have the buying power of $165 886 today which tells you the purchasing power has dropped by 60%.
When I look at the South African Rand versus the US Dollar it is far worse because the Rand exchange rate to the USD back in 2005 was R5.85 to the Dollar. Today 1 USD is worth R17.38 so nearly a 300% loss in depreciation over 20 years which does not include inflation. The scary part is the Dollar lost 60% in purchase power so the Rand is in real terms over the 20 year period losing 360%. This is a loss of 18% loss per annum meaning you need to find an investment of 18% APR just to stand still.
The way I see this is you have no choice but to be invested in USD backed investments that are earning rewards. The 2.65% loss per annum the Dollar is experiencing is easier to stay ahead than trying to find an investment offering 18% if invested in Rands. The choices are simple and obvious and the easiest option we have at our finger tips is crypto and stable coins.
Forget the crypto market what we are seeing and experiencing now, but over many years we should see a much higher return especially if staked and compounding rewards. Earning 2.65% per annum is not difficult to achieve which is the number we need just to stand still.
The property I purchased in SA back in 2004 highlights currency depreciation as the property has increased in value by around 250% which has literally earned 0% return due to the currency having lost 250% with the GBP over the same period. This is why keeping USD, EURO or GBP is not only smart, but a definite must to holding on to your savings value. Those currencies invested earning more is what is going to keep you ahead and why holding any other currency is not worth the risk.
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The real game of inflation will unfold in 2026-2028. Imagine if China and Japan collectively dump us treasury even partial dumping will result in staggering inflation.we are in testing times for sure and every reset undergoes chaos and turbulence. When I say china or japan dumping US Treasury that will be at the behest of US and deep state. "Kill the dollar" an article published in WSJ in 2016 speaks a lot and revealing lot if u could relate to what is happening in 2025
The home I purchased in 2001 for $265,315 sold 20 years later for $988,000 which is 6.8% compounded annually... Long term appreciation of the real estate in USA is on average 3-5% so I think I did well, but you can get much better appreciation in the stock market or in BTC going forward. Our interest rate is 4% on the risk free savings accounts or money market funds right now...
I sometimes see it as another good reason to stay long on crypto, as asset prices will rise with as inflation grows. The tricky part might be picking assets with longevity in this crypto space.
Inflation an never ending roller coaster, devaluation of our currency stands to reason given the problems currently.
Family asset in a home has never been an option in my opinion, or pay a lifetime in rentals that constantly move as well.