People are currently dealing with a huge rate of inflation not seen in generations. For a long time we have had quite the opposite problem here, as much as many people liked it, namely that prices have not risen at all, which, however, is also not good for the economy. Last year, we therefore wondered how inflation could reach the then apparently threatening five percent. We didn’t even know it and we are almost twenty years old.
Unexpected return
Although it now appears that inflation should start to fall next year, nobody can rule out that there will be a second peak and that the general rise in the price level will be much longer with us. However, it also has its positive sides. While in previous years it was virtually impossible to get interest from banks, now individual companies compete to see who will give you more.
And you can make a decent amount of money from it. If you put your money in a savings or term account, you don’t have to do anything else, just collect the fat interest. Today they even reach 6.5%, if you take advantage of the best offers.
This completely changes the rules of the game. In previous years, free money was basically lost and had to be invested. For example, in real estate. Their prices then skyrocketed as everyone tried to put their money into it. Subsequently, he could perhaps rent such an apartment, but then discovered that he receives only 3 to 4% of the purchase price per year, and still has to pay for necessary maintenance and repairs. It’s also definitely not a carefree investment.
Price increases may not have such an impact
It’s different now. For example, you can deposit one million kronor for free into a savings account with an interest rate of six percent. You will receive 60,000 crowns in one year, absolutely without any effort. And if you have, say, five of those millions, which you would have used to buy an apartment for example, you’ll get 300,000 kroner a year. You wouldn’t get much for the rent.
Of course, inflation is still eroding real savings today because interest rates are lower. But it is a relative view. If we assume that energy and food are the most expensive, then you have to ask yourself how much you actually need. You pay for your family’s consumption and that’s it. However, other things, like apartments or cars, don’t get more expensive, some even get cheaper.
If someone has a lot of savings, it doesn’t matter to them that the price of butter has gone up by 30%, if they only buy two or three cubes a month at most. The impact on inflation is huge, but relatively small on your savings. Especially if it is well preserved and valued.
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