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The world of money and finance seems awfully daunting at the moment. With news coming out every single day of the cost of living going up, interest rates rising and inflation soaring, it can be hard not to go into a full blown panic about the state of the economy. Enter Nick Hubble.
Nick Hubble is an economist, and Editor at Fortune & Freedom, a website dedicated to helping you take back control of your finances. Their mission is to educate and inform, helping you feel in control when it comes to your money. With plenty of fresh voices and new insights into the economy and the financial systems that impact you, Fortune & Freedom is a hub of information.
So, we thought there would be no one better to get insight from about inflation in Britain, than the Editor of Fortune & Freedom himself. We sat down with Nick to get his take on what inflation is, what the impacts are, and how you can protect you money.
Don’t forget to check out the Fortune & Freedom podcast, where Nick pulls back the curtain on everything from Bitcoin to gold and Brexit to interest rates.
“The idea is that prices are rising, but it gets progressively more complicated from that point on,” Says Nick. “For example, how do you measure prices? What is causing the inflation?”.
He continues, “If you go back through history, the definition of inflation has changed as well.”
“But not all prices are included in the measure of inflation,” Nick points out. “For example, house prices are not included. So it gets a bit imprecise and you can play with the statistics and the different measures for inflation.”
Watch the full video above, or watch it on our Youtube Channel.
“The impacts depend on who you are, how you earn your income, whether your income is likely to go up or down with inflation or not,” Nick explains. He goes on to explain that if you are on a fixed income, such as living off pension savings, you will suffer more as your income won’t be adjusted for inflation.
“It is important to note that some people actually benefit from inflation,” he tells us. This is an interesting point. But who benefits? “People who borrow lots of money are actually benefitting from inflation.”
Watch the clip above or go to our Youtube Channel to watch it there.
“It depends where within those social classes you are. It depends on how you invest and how you earn your money and whether you can negotiate wage increases.” Nick explains.
Nick explains some people will do better than others in these times.”There’s division in society basically now, between those who understand the problem, and who can deal with it, and those who can’t.”
He continues, “Somebody who’s got a contract that’s fixed or is earning a wage that is not going to be raised until the end of the year are really suffering, because they are falling really far behind.”
Watch the full clip above, or check it out on our Youtube channel here.
“Once [central bankers] are faced with inflation above their target, they start to tighten monetary policy and they continue to do that until there’s some sort of financial crash. Until something goes badly wrong.” Nick explains.
What happens during a crisis? Well, inflation comes down. “Everyone’s focused on the crisis, not the fact that inflation has come down!”
“On the one hand, we all want inflation to come back down, but we don’t want a financial crisis,” says Nick. “The idea that central bankers can bring inflation back down again by tightening monetary policy, without causing some sort of major crisis, somewhere, is a myth.”
What the full clip above or click here to watch it on Youtube.
“What makes investing so difficult right now, is that you need to protect yourself from both inflation and the financial crash, and there’s no investments that do that,” Nick tells us. “Other than perhaps gold.”
“The problem with a lot of the investments that benefit from inflation is that they do really badly during a crash.” What is an example of this type of investment? “Property is a good example of that.”
On the other hand, some investments that do badly during periods of inflation may do well during a financial crash. Government bonds, for example, suggests Nick.
Watch the clip above or click here to watch it on Youtube.
“This is an incredibly difficult question,” replies Nick. “I think gold definitely should be part of everybody’s investment portfolio, because it has that protection from both extremes – the financial crash and the inflationary side.”
Own a small business? You could do better than you expect from a financial crash. Nick explains; “Owning a small productive business that actually generates cash and has a reliable revenue stream is another good option.”
“I recommend avoiding debt as much as you can,” He continues. “Paying off debt is probably a better idea than investing right now.”
See everything Nick Hubble had to say by watching the clip or check it out on Youtube.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.