Definition of Purchasing PowerThe amount of goods or services that can be obtained with a given amount of money depending on the price level.
Investing is sometimes seen as an overly professional term, beyond the reach of many. However, this is far from the truth, provided you seek sound advice from an experienced professional in the sector you choose to invest in.
Today, with rampant inflation, all the money we save, whether a little or a lot, loses purchasing power if we don’t use it. In other words, our money, when it’s idle, is worth less every day.
When you ask why people save money after a certain age, retirement plans are often the first thing that comes to mind. Well, maximizing the return on that money determines whether or not we have a comfortable retirement.
To invest, there are two paths in terms of form:
1. Educate yourself in the world of investing, regardless of your background or knowledge. This is beneficial in the medium term.
2. Have someone accompany you and explain in a simple way how the economy works, how to interpret it, and how to make the appropriate joint decision.
Delving into the real estate world, and backed by Property Buyers by Somrie, a brand with over 15 years of experience, we were contacted a couple in their sixties a couple of months ago. Both retired, they had some savings in the bank and were worried about the very issue addressed in this article’s title. As time goes by, with the meager returns from the bank and the rate of inflation, will our savings be worth less and less each day? The answer is a resounding YES.
Well, the solution is to try to make those savings profitable, “at least” keeping pace with inflation, so as not to lose purchasing power, which, on the other hand, from an investment point of view, is not easy at all, closing April with 4.1%.
Well, we got down to work:
AIM:
Savings: €150,000
Operation: Housing for rent
Location: Santander and surrounding areas
Minimum NET return: 4%
RESULT:
Amount: €128,000 + ITP
Operation: Housing for rent in a high-demand area
Location: City center of Santander
Net return obtained (rent): 5.8%
Property revaluation: 8.8% (it was purchased at -8.8% in relation to the current market value)
Total return on investment after 4 years: 8.3% NET.
CONCLUSION:
If the cost of living averages 8.4% throughout 2022, a level that experienced analysts say will be hard to see again, even if it’s an excellent deal, there’s still a loss of purchasing power of -0.01% compared to 2022, but a positive balance of +4.7% compared to the expected average in 2023.
Seek advice from a good real estate agent, a good Real Estate Personal Shopper (PSI), or someone from any sector. But don’t lose PURCHASING POWER with your money.
