5 Reasons You Should Say No to That Loan During a High Inflation Period
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Get the facts right with the 5 Reasons You Should Say No to That Loan During a High Inflation Period.
Read this before you go to the bank to get a credit facility you will regret taking later.
Ghana is experiencing high inflation, which stands at 29.8% and is expected to hit 30% if the trend continues. Inflation has more than doubled since January 2022 and one may ot be far from right to say Ghana is in an economic today.
With the value of the US dollar on the rise and the devaluation of the local Ghana cedi, many investors are wary of investing in countries with high inflation rates. Today, the interest rate charged on credit facilities must be one key factor that must halt your question for loans to stay safe from defaulting because the real value of your income will continue to fall making repayments a challenge.
However, as we all know, that doesn’t stop everyone from jumping in head first.
With that said, it may come as no surprise to you that at this moment, many people are looking for ways to invest their money in a way that will help them avoid a potential recession.
Fortunately, there are plenty of financial advisors who can help you navigate through all the different options available to you right now.
However, if you aren’t quite ready or willing to go down this path just yet — while it may be difficult — there are other methods you can use instead.
For example: Saying no to someone offering you a loan during a high-inflation period . Here are 5 reasons why it’s best not to take one out at this time…
5 Reasons You Should Say No to That Loan During a High Inflation Period
High inflation is the perfect time to sell your assets
Assuming you’ve been holding onto your stocks, shares, and any other kind of asset for some time, then right now is the perfect time to sell. Why? Because currently, the value of your stocks is at an all-time high. This is due to the fact that the US Dollar is on the rise, and it is having a positive effect on stocks. The good news is that your stocks will likely drop in value once the next recession hits. However, by selling off your assets now, you have the perfect opportunity to take advantage of the current high values while they last. This way, you’ll have enough money saved up to last you through the next few years, as well as a nice little nest egg for when the economy inevitably takes a turn for the worse.
Inflation will devalue your loan
If you go out and take out a loan during a high-inflation period, then you’re likely to see the value of that loan drop considerably with time. This is because the inflation rate will naturally increase with time. Therefore, the value of your loan will decrease as well.
This means that if you decide to take out a loan today, it will likely be worth less than it was when you first took it out. This means that you’ll have to find a way to pay back more than the original amount, which can be very difficult. The only way to avoid this is to look for a loan with a low interest rate. This will help you make ends meet a little more comfortably, as well as make paying back the loan a lot easier.
Your money has more value now
As we’ve already mentioned, the US dollar is on the rise. This means that more and more people are investing in American dollars. This, in turn, means that they have started to become more valuable. In fact, many financial analysts believe that the US dollar will hit above 5 to the dollar by the end of this year. This is because the government is currently printing more money in order to help combat the effects of the trade war with China.
However, as this is happening, the value of other currencies, such as the yen and euro, are decreasing.
This means that the more money you hold in those currencies, the less value it has. The bottom line is that you need to exchange your lower-value currencies for higher-valued ones.
This way, you’ll have enough to last you through the next few years, as well as more than enough to comfortably pay back any loans you may take out.
You’re better off waiting for a recession
If you look at the graphs and charts outlining the past economic cycles, you’ll notice that every five years or so, the economy will take a dive. This usually happens due to a variety of reasons, such as the housing market crash, stock market crash, and so on.
However, the good news is that it’s almost always followed by a recovery period. This is when the government decides to pump more money into the market and inject it back into the system — thus boosting its value once again.
Well, we’re currently in the middle of a recovery period, which means that the next economic crash, aka recession, will likely happen sometime within the next few years. Of course, there’s no way to accurately predict when it will happen, but there are some signs that indicate that it will occur sometime in the near future.
For example, interest rates are rising, the dollar is dropping, and the trade war with China continues to escalate.
Alternatives to taking out a loan with high inflation rates
If you decide not to take out a loan during a high-inflation period, then you’ll need to find other ways to make ends meet. For instance, you could take up a side hustle to earn a little extra cash on the side.
There are plenty of online apps and websites that allow you to do this, such as: – TaskRabbit – Upwork – Fiverr – Craigslist You could also look for a better-paying job, or even consider starting your own business. The possibilities are endless, and all you need to do is look for a solution that works for you.
Overall, there are a handful of reasons why you should avoid taking out a loan during a high-inflation period like today in Ghana. The most important is that the value of your loan will decrease as time passes. This means that you’ll have to pay more than you initially borrowed, which can be difficult — not to mention stressful.
However, by selling off your assets, investing in higher-valued currencies, and finding other ways to make ends meet, you can avoid taking out a loan at all. Doing so will help you avoid inflation and make ends meet a little more comfortably as we move forward through this economic cycle.
Source: Ghana Education News