In economics, inflation is ‘a sustained increase in the price level of goods and services in an economy over a period of time’. In simple terms, it means prices are going up and the value of your money is going down.
According to the data gathered by Quantitative Financial Analytics, the average interest rate on money market funds is currently 13.06% per year. This means that with 11.31 percent annual inflation, N100,000 invested in a money market account at 13.06% percent would gain about N1,750 in purchasing power over the course of a year.
Looking at the data above, it’s not an encouraging return on invest.. so what next
Investing in bonds, stocks, loans, commodities are also a good option to take to beat inflation but then these options also comes with risks. except one Real estate investment. it is the mother of them all as an investment/money-making strategy to beat inflation in Nigeria, it’s the only investment that has the lowest risk.
if you own rental real estate in inflation, your rent increases and that ability to increase your future cash flow gives you an inflation hedge or protection against this deadly ongoing Nigerian inflation
Just as the value of the property rises with inflation, the amount tenants pay in rent can increase over time. These increases let the owner generate income through an investment property and helps them keep pace with the general rise in prices across the economy. As a smart and futuristic investor, what then do you do with this information.