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How to Beat Inflation and Preserve Your Purchasing Power

May 31, 2023

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How to Beat Inflation and Preserve Your Purchasing Power

Understanding inflation and its implications is an integral part of financial and investment planning – you don’t want your capital to be eroded over time, you want it to grow. But containing inflation is not as straightforward as merely adjusting interest rates. A significant increase in rates can potentially suppress the economy and curb inflation, but it also carries other riskier consequences.

A hot air balloon deflating in a large field Purchasing Power
The US’s inflation worries are not over. Photo by Sean Robertson on Unsplash

This consideration is particularly crucial as merely stunting economic growth does not address the core structural issues impacting your purchasing power. Today, inflation, although it has reduced slightly, remains well over the Federal Reserve’s 2% target. Data indicates that our inflationary challenges are set to extend way beyond the pandemic’s impact.

Paradigm Shifts on the Horizon

Financial writer Matthew Klein identifies two major paradigm shifts, termed the “green” and “gray” transitions, that may render the pre-pandemic price stability a thing of the past.

The ‘green’ transition refers to the strategic plans to reshape the global economy in response to climate change. The ‘gray’ transition, on the other hand, points to the economic impacts of rapidly aging populations in some of the world’s most significant economies.

Exterior view of mountains fading into the distant horizon Purchasing Power
Both the green and gray transitions will have a serious impact on the economy of the future. Photo by Simon Berger on Unsplash

The green transition entails massive investments in areas ranging from clean power generation and electric transmission lines to sea walls. The pursuit of more sustainable methods for producing essential materials such as cement, steel, and plastic will also demand huge amounts of capital. These transitions demand trillions of dollars in new investments to achieve vital global carbon emissions targets.

Moreover, the green transition coincides with an increase in extreme weather conditions, which threaten society’s productive capacities. A less predictable climate can make crop production inconsistent, leading to more stockpiling which can then exacerbate shortages. Remember the toilet roll shortage during the pandemic?

Developments like this might even spur resource nationalism, with countries restricting exports to ensure domestic availability. As we have seen over and over again in the last few years, supply chain disruptions and shortages can unbalance supply and demand, resulting in price hikes.

The Role of Alternative Assets

In the face of these substantial transitions and the attendant inflationary pressure, the role of alternative asset investments can become more significant than ever before.

MCAs offer the potential for higher returns, which can help you keep pace with inflation and maintain your purchasing power. Our 24-month note, for example, offers a 12% target return – fully 2.5x higher than the 2 Year Treasury Note.

Through our rigorous vetting and due diligence processes, Supervest’s MCA notes aim to offer investors a reliable investment avenue during volatile times. While traditional safe havens like T-bills might be impacted by broader macroeconomic uncertainties, alternative investments such as MCAs could potentially offer investors an effective means of preserving, and even growing their wealth.

In an ever-evolving economic landscape, understanding these dynamics and the role of alternative investments can better equip you to navigate and capitalize on the opportunities these challenges present.

You can get started with MCAs here.

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