Financial Education - Understanding Inflation and how businesses make a profit off it

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Come to look at it, there's no truer fact than that every downside of a thing is an opportunity. In business, there are lots of this. Inflation is one of them, and although the majority only see the bad side of it, it's an effect that cannot be avoided. There is no financial structure that could bypass this, it's built into the system that prices must rise and fall.

First of all, inflation is the increase in prices of goods and services or the rise in the cost of living. This is a downside side for individuals, especially ones belonging to fixed income sectors, it preys on them as the "costs" outweigh their pockets. But as an educated individual, inflation isn't one of those occurrences that should hurt your finances, at least not much. Knowledge is the greatest tool of all time, once put into practice.

With the current crisis faced in the world today, inflation will be on the high side, looking at Russia now, their native currency the ruble has sharply fallen, mostly due to all the sanctions flying around. In such locations, businesses looking to make a profit would be looking to raise their price rates, that, to meet the effects of the downtrends…

Is housing the best type of investment?

Housing has a condition of being susceptible to so many things, but in some cases, a gold mine. When you look at its makeup, and how inflation tends to position these structures in a situation that regenerates more than what was being put into it, you realize it's one of the most profitable ventures. However, it’s not exactly the best out there, when trading on lands remains.

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Lands unlike houses are not susceptible. Nevertheless, the reason housing remains a better alternative is because not so many are going to be hungry to build structures in an inflated atmosphere, so in that case, only urbanization stands profitable to the trading business of lands. When a location grows much more attractive than before, lands in that location tend to embrace a spike in value.

However, in both cases of urbanization and base level inflation, housing is still supreme, now you'd realise why people love real estate.

So in a nutshell, Rental Businesses is a goldmine

Yes, the most opposed to downside ventures, but yet profitable is rental businesses, no risk no gain right? As though housing isn't a sector where prices can be fixed across, it's all about self desire and putting value on the structures built. When I say rental businesses, I'm specifically talking about house rentals.

I've seen structures put up for rent in millions, thousands, on a yearly basis, it's a killer venture. As such, inflation is a good enough reason for these folks to raise their prices even more, thereby curbing the potential expense they should have gone into, and also making a good whole profit out of it.

Inflation isn't such a bad thing when you know how to play your cards well. It's just like arbitrage trading, trading price difference, but in this case, rental properties are the profitable markets when currency prices are dipping. Everything that happens is as a result of both individual trading patterns and that of the government, so it is important to watch both activities to know when to push money in, in anticipation of a profitable season…