The best way to survive deflation is to use technology and other innovations to become as efficient as possible. Now's not the time to stretch your budget to buy a home that's a financial long shot. That's because central bankers and governments fear deflation more than inflation.Falling prices may seem like a good thing, as goods become cheaper.And if you're not heavily in debt and you have savings and a relatively secure job, then deflation doesn't need to be the nightmare it's often portrayed as.But for indebted individuals and economies like ours, deflation is a problem. That will help you stand out in the workplace and find time for a second job if necessary. WTOP.com | Alexa | Google Home | WTOP App | 103.5 FM
And, Dow Jones' Kevin Noblet discusses investing in farmland. We have a continuation of fear sweeping the planet over the coronavirus.
Inflation and deflation are opposite sides of the same coin. The economic fallout caused by the novel coronavirus pandemic has some analysts and regular folks speculating that deflation could happen in the U.S. Holding debt is buying a bond," Beach says.The best way to survive deflation is to use technology and other innovations to become as efficient as possible. Here’s how to prepare.With deflation, debt gets more expensive over time, taking a bigger and bigger bite out of your real income. That’s because falling... 2.
Be more productive. The early days of deflation are typically marked by prices that seem … How to Prepare for Inflation Wrap Up.
When the prices of some things fall, consumers get a break. "I wouldn’t go out and lock yourself into buying a big home or a mortgage," Ma says. "That said, stocks generally go up or down in tandem with economic growth, and deflation usually means slow growth or recession. So it might be a good idea to build some deflation-protection into your diversified portfolio, just in case. They will lose their homes, then rent the homes back from the original lenders.
That makes it harder to pay the interest bills on borrowed money.In a world with a lot of debt, this is to be avoided if at all possible which is why British and American central bankers have gone to the extremes of printing money and slashing interest rates to near-zero.Yet, while prolonged deflation seems unlikely in the UK at least it's not impossible. Now’s not the time to stretch your budget to buy a home that’s a financial long shot. There has been a partial reopening with numerous regulations for businesses to follow (as if they didn’t have enough to follow already). Keeping your financial goals in mind, Here's one way to think of how bonds work during a deflationary period: "If you don't want to own debt because every payment gets more expensive, wouldn’t you like to hold debt? So as investors anticipate deflation, they buy bonds, which means their prices rise and their yields (the annual interest payment as a percentage of the price paid) fall.Just look at what's happening today Japan's ten-year government bonds yield around 0.5%, while Germany's yield 0.9% (if held to maturity). Of course, don’t use lowering prices as an excuse to splurge when it’s not necessary. You can't control or know when deflation will happen, says Roger Ma, certified financial planner at lifelaidout and author of "Work Your Money, Not Your Life," so focus on what you can control.
Phil Oakley explains how you can protect your portfolio from falling prices. So the less debt you have going into a period of deflation, the better.
"Don't plan on getting your bonus, and adjust your cash positions accordingly." This compares with around 2.4% for similar bonds in the UK and US, where deflation is not yet such a threat.If deflation does rear its ugly head, there is still scope for UK and US yields to fall and for bond investors to profit. Build emergency savings. That will help you stand out in the workplace and find time for a second job if necessary. So the less debt you have going into a period of deflation, the better.
You can't control or know when deflation will happen, says Roger Ma, certified financial planner at lifelaidout and author of "Work Your Money, Not Your Life," so focus on what you can control.
Don’t spend money before you get it. Update 05/12/20: This story was published at an earlier date and has been updated with new information.Copyright © 2020 by WTOP. Remember that a deflationary period, if it even happens, is temporary, and fine-tuning your financial plan will help you make it through.
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