All of these saving policies are aimed at preserving surpluses for future crises, but the question that arises here is, can individuals save in times of crises, such as inflation, which has reached record rates that most countries of the world have not witnessed for nearly fifty years?
And because inflation means a rise in the general level of prices, this rise is necessarily offset by a decrease in purchasing power, and therefore the process of saving a currency with inflationary pressures is a devaluation of its value, so currencies that suffer inflation against other difficult currencies such as the dollar will necessarily suffer a kind of erosion and decline, according to the expert. Economist Waddah Al-Taha, who emphasized that it should be in a currency that does not suffer decline or a currency that maintains its value such as the dollar or currencies related to it because of its positive performance resulting from raising interest rates.
In his interview with Iqtisad Sky News Arabia, Al-Taha explains that saving and preserving the value of the currency in times of inflation is by investing in assets that are capable of growth and do not suffer from a decline in value due to economic conditions, noting that gold is an excellent tool of savings tools. Although its price has decreased by 9 percent since the beginning of this year, in the long run it is considered a store of value.
Al-Taha pointed out that the third quarter of this year witnessed the highest quarterly rate of gold purchase by some central banks in the world about 50 years ago, when the dollar was linked to the gold base, as well as the quantity of retail gold purchase by individuals during the same period was more than 1180 tons. He also pointed out that real estate is a good investment asset and helps hedge against high prices, and thus is considered a safe haven and maintains its value in times of inflation, provided that the purchase is in prime locations.
For his part, banking expert Hussein Al-Qamzi asserts that inflation brings a state of uncertainty to individuals and reduces the purchasing power of consumers, which renews the importance of saving money and reinvesting it in order to feel more secure during difficult economic times.
Speaking to the “Sky News Arabia” website, Al-Qamzi provided a recipe for savings consisting of seven tips in case inflation rates are high, the first of which is to allocate a certain amount of money every month to go to an “emergency” account, meaning saving what is equal to the salaries of at least three months, and the best is six. months, in case the person loses his job, as companies usually reduce their employees in times of inflation, indicating the need for the person to prepare for this matter by depositing the amount after its completion in a short-term bank deposit.
Al-Qamzi adds in the second advice: “After the person succeeds in saving the emergency amount, he must start by providing a monthly amount equal to 10 percent of his income, (it is good if the spouses work, the savings will be 10 percent of each of them monthly), and whenever a certain amount is collected. It is possible to buy bonds and investment certificates, for example, the yield of US Treasury bonds is currently 4 percent.”
In the third and fourth advice, Al-Qamzi demanded that a person not buy goods that lose their value over time, such as a new car, renovation of furniture or decoration, or any improvements in the house, with the need to postpone these decisions temporarily, in addition to reducing expenses without exaggeration, such as canceling the habit of eating outside the home. And cancel unnecessary monthly subscriptions.
Al-Qamzi continues in the last three tips, “If a person has additional income that comes from renting a property, for example, he must raise the price to compensate for the increase in inflation. By increasing the prices of its products and services, and then increasing the cost premium for employees, and finally, the individual must make the investment a continuous process.
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