Inflation is a fact of life and Australians are being urged to consider how best to save and invest their money to ensure their purchasing power is not eroded. According to calculations from fixed income investment app Blossom, the average Australian could lose $212 per month or $2553 over the next year if they don’t have proper plans in place to make the most out of their money.
Although there are no guarantees when it comes to investing, there are a few strategies that Australians can use to make sure their money is working hard for them. Firstly, it is important to focus on diversification. This involves spreading your investments across a range of assets, such as shares, property, bonds and cash. This reduces the risk of your investments being negatively impacted by any one market or asset.
Gaby Rosenberg, co-founder of Blossom, encourages individuals to protect their funds from the decrease in purchasing power caused by inflation, as the typical Australian has an estimated $34,507 in their savings account.
“The current economic climate is incredibly challenging, as wages are not rising in tandem with inflation which is at its highest point since the 1980s. To make matters worse, the Reserve Bank of Australia has increased interest rates, leading to higher mortgages that are being passed onto renters,” she said.
Ms Rosenberg has presented three options for individuals to manage their money: they can deposit it in a savings account, invest in shares, or invest in fixed income. Fixed income investments comprise of government or corporate bonds, and they provide a steady stream of income over a predetermined timeframe.