Small losses in investments vs. inflation.

[liasbaa]

Small losses in investments vs. inflation.

I have thought about this issue a lot and it is clearly evident in people's behavior that people are keeping money in the bank and the value of that money is gradually decreasing due to inflation. People do not have any tension about this issue but people get tense when they invest and after investing when they see that they are losing some amount due to temporary negative changes in the market. Yes, there may be some loss due to temporary changes in the market but that market becomes positive again, but why don't people worry about the amount of value they are permanently losing in fiat due to inflation. I think the permanent loss of inflation is much more serious than the small loss of investment.

We do not realize the loss of money due to inflation, so we do not give it much importance. But the amount of money kept in the bank is gradually being lost due to the effect of inflation. But after a certain time, the bank gives us a small amount of profit, so we do not realize it or many do not think about this issue. If this amount of capital could be invested, the profit would have been much higher after a certain time.

Some people sell because of temporary changes in the market and sometimes panic, but the possibility of getting profit against capital in long term Bitcoin investment much higher than any other investment.

The product that you are able to buy now, you will not be able to buy this amount of product at the same price after the next 5 years, this means that the value of your fund is decreasing due to the effect of inflation. This is an example, so accumulate Bitcoin through discretionary income compared to additional fiat. There will be a much higher chance of profit compared to keeping fiat in the bank.

[Cityhunter34]

Lack of knowledge and information can be responsible for this. There are people that don't know how to invest and since they are seeing other people investing their money and making profits, they'll choose to invest without having any basic knowledge and the investment they are involving themselves. Some people don't even know the difference between floating profit and lose and once they noticed that the worth of their crypto investment is depreciating, they will have no option than to complain about their losses when it's not yet a real loss until they sell their holdings.

Knowledge is the key to navigating anything we are doing, because when you don't understand how things work, you will definitely find it difficult. Even though we often make mistakes sometimes, it is very good for us to always do the needful, so that in case anything comes up in the process, you can easily withstand it and move on regardless of the amount. Making money through Bitcoin investment is something that requires a lot of work and discipline, which many people are still far from, and they want to make it in the short term, which is not possible.

[TheUltraElite]

Inflation is something that is not going away, so we have to operate methods to avoid getting into collecting too much cash which is deprecated its value over time and will continue further to do so.

The importance of keeping money in banks is still there but you would prefer keeping that share small and consider stocks, bonds, crypto as alternative methods to invest money in.

However problems exist in every sort of investment and therefore knowing the asset prior to investing is important. It will not always fight the inflation and often you cant cover it at all, but its worth doing if one is willing to invest and make wealth.

[EarnOnVictor]

but why don't people worry about the amount of value they are permanently losing in fiat due to inflation. I think the permanent loss of inflation is much more serious than the small loss of investment.

It's not as simple as you said it. Your money in the bank is often viewed as a guaranteed money (at least for the figure), but you can't say the same of a volatile investment. While many tried some investments, they rather lost too much. Is that not worse than inflation? Plus the fact that banks would give you interest on it, and this interest is even negotiable depending on the amount.

However, this is not to support the bank, but weighing a better option. In my country, you can still get about 8% interest per annual on your money, so if inflation is not insane, your money could still be doing good, but I fear hyper inflation. Above all, locking your money in properties and business might be the best option here.

[greysonz]

Small losses in investments vs. inflation.

I have thought about this issue a lot and it is clearly evident in people's behavior that people are keeping money in the bank and the value of that money is gradually decreasing due to inflation. People do not have any tension about this issue but people get tense when they invest and after investing when they see that they are losing some amount due to temporary negative changes in the market. Yes, there may be some loss due to temporary changes in the market but that market becomes positive again, but why don't people worry about the amount of value they are permanently losing in fiat due to inflation. I think the permanent loss of inflation is much more serious than the small loss of investment.

There's something to think about based on what you're saying. In the country where I live, inflation in the local currency is 12 percent. In the US, it's a maximum of 5 percent. So, if I constantly convert my money into dollars, I'll avoid a 7 percent depreciation. Let's not worry about exchange rate differences; let's assume the average rate remains constant, as it has for the past seven years. But you could also invest these dollars. You can't put them in banks; they offer very low interest rates on dollars. So you could buy physical gold, but the spread is huge, making it pointless. So, that leaves Bitcoin. It's actually selling against USD. Bitcoin is definitely ahead of all other assets in this regard, too. And in all other respects—easy to transfer, easy to store, limited supply, and so on.

[freedomgo]

Inflation is constantly happening, people's expenses are constantly increasing, the prices of daily necessities are rising, but despite all this, people's income has not increased.

Blame that on the corrupt government because they are the ones managing the country and their actions affect our economy.
If you belong to the top 10 countries with high inflation you will really feel its effects.

But if you are at the bottom of that list, inflation is less of a problem for you.


https://www.visualcapitalist.com/mapped-inflation-rates-around-the-world-in-2026/

People still have to be satisfied with the salary they used to work with earlier, and they are facing various obstacles in managing their families well from the middle. The salary that used to meet all the needs of the family and keep money aside, now the family cannot be managed well with the same amount of money, but often has to borrow money at the end of the month.

 As much as it is possible to face this challenge now, it will be more difficult to face this challenge in the future because inflation is constantly increasing and the value of the local currency is gradually losing value.

No matter how hard we work if inflation is high or worse we experience hyperinflation, the maximum we can achieve is just to survive from that nightmare. So it's better if we don't reach that point, the government needs to work on the problems they already foresee before they become serious ones.

[Mpamaegbu]

People do not have any tension about this issue but people get tense when they invest and after investing when they see that they are losing some amount due to temporary negative changes in the market.

Your observation is valid. It's the same way some people won't complain when their offline businesses wreck but will cry blood if their investment in cryptos dipped, and call it a scam.

For the fiat and inflation thing, my method is to leave whatever money I'm not spending immediately in stablecoin. Just a few local fiat standby for daily needs. I convert my stablecoin to fiat immediately I want to do heavy spending, and that's it. I've been able to save myself from that inflation thing to some extent using that method.

[sunsilk]

Blame that on the corrupt government because they are the ones managing the country and their actions affect our economy.
If you belong to the top 10 countries with high inflation you will really feel its effects.

But if you are at the bottom of that list, inflation is less of a problem for you.

It is a sad fact that we have no control with. Even if you're a higher earner from any of those countries, you'll have to deal with it still due to the incompetence of the government.

All of the actions that affects the economy will be passed to the citizens whether it will be good or bad.

But for most, if it's high inflation then that reflects how terrible they're doing with the country.

Corruption is the very reason why inflation is high for certain countries. And the government simply conveys a message that its people are on their own.

[abhiseshakana]

Small losses in investments vs. inflation.

I have thought about this issue a lot and it is clearly evident in people's behavior that people are keeping money in the bank and the value of that money is gradually decreasing due to inflation. People do not have any tension about this issue but people get tense when they invest and after investing when they see that they are losing some amount due to temporary negative changes in the market. Yes, there may be some loss due to temporary changes in the market but that market becomes positive again, but why don't people worry about the amount of value they are permanently losing in fiat due to inflation. I think the permanent loss of inflation is much more serious than the small loss of investment.

I think not all people are aware or think mathematically that inflation is a silent parasite on our financial health. But matter of fact psychologically not everyone is tolerant of the term market fluctuation. When i explained about inflation to my parents and the need for investment  and what on their mind, investment requires capital prepared to face risk, and they must ready loosing it. For people who don't spare funds with readiness acceptance to experience floating losses, investing in high risk instruments in an attempt to keep pace with inflation is a financially risky decision.

Based on my experience before making investment,  my consideration always what was the money used for, and when? If i need those money within a year i think i can not tolerate any fluctuation but if those money from retirement fund I’m ignoring daily, weekly, monthly fluctuation for long term goal. The last consideration are my own setting for maximum dragdown so i can still have sound sleep and a healthy mind.

[mirakal]

That's because those people have already accepted that seeing inflation is the new normal, and that inflation is here to say. So even if they know they are losing, they wouldn't mind it as long as they are continuously saving in fiat thinking that someday their savings will grow bigger and benefit them in the future, despite of the fact that the fiat's value only depreciates in the long run.

While for bitcoin, small losses turn out a big issue for them. Its like they can't afford to lose, even if they know in themselves that investing with their emotions high will definitely lead them to bigger and consistent losses.

[nara1892]

The reason is because inflation is a loss that is not visible even though the loss is real, for example someone has 100 million dollars and if the average inflation is 5% per year then he will lose 62% in 20 years, and one of the reasons why they do not feel it is because what is reduced is the value and not the amount of money.
In the psychological point of view of humans it is more afraid of losing the figure directly as it happens in investments if the price of the asset falls then the amount of money they will obviously be seen reduced, even though it is not a permanent loss during the market move. So the problem lies in the fact that most people look at the numbers and not the values.

[Maslate]

but why don't people worry about the amount of value they are permanently losing in fiat due to inflation. I think the permanent loss of inflation is much more serious than the small loss of investment.

It's not as simple as you said it. Your money in the bank is often viewed as a guaranteed money (at least for the figure), but you can't say the same of a volatile investment. While many tried some investments, they rather lost too much. Is that not worse than inflation? Plus the fact that banks would give you interest on it, and this interest is even negotiable depending on the amount.

However, this is not to support the bank, but weighing a better option. In my country, you can still get about 8% interest per annual on your money, so if inflation is not insane, your money could still be doing good, but I fear hyper inflation. Above all, locking your money in properties and business might be the best option here.

The key here, at least you leave some small amount of fiat in your bank account while you continue to maximize your investments and diversify them. That way, even if inflation is slowly eating your savings in the bank, that does not matter at all because inflation is now inevitable. But the fact that you are also growing your money through your various investments, that could hedge against inflation, while you are also preparing yourself to achieve financial stability and security from your multiple flows of income.

[Aliciaworld]

This confirms the old saying that "the perception of reality is more real than reality itself" I think the fact that people can see the amount of reduction in the value of their investment as it goes down reacting to the market is the reason they're so sensitive to it, whereas as people can't "see" the value lost due to inflation, they could not be bothered about it.

It all boils down to the fact that inflation is invisible while investment loses aren't.

[freedomgo]

Blame that on the corrupt government because they are the ones managing the country and their actions affect our economy.
If you belong to the top 10 countries with high inflation you will really feel its effects.

But if you are at the bottom of that list, inflation is less of a problem for you.

It is a sad fact that we have no control with. Even if you're a higher earner from any of those countries, you'll have to deal with it still due to the incompetence of the government.

All of the actions that affects the economy will be passed to the citizens whether it will be good or bad.

But for most, if it's high inflation then that reflects how terrible they're doing with the country.

Corruption is the very reason why inflation is high for certain countries. And the government simply conveys a message that its people are on their own.

If only we could easily leave the country we would, but if we are stuck there we have no choice but to find a way to survive. Even in our country the leaders are corrupt, and my way to survive without being badly affected by inflation is to find an online job that pays in USD, that has been what I've been doing for many years already and I'm surviving, so thanks to the online opportunities, hopefully the time won't come when they will disallow us from using the internet, I'm just overthinking. 

[YUriy1991]

The reason is because inflation is a loss that is not visible even though the loss is real, for example someone has 100 million dollars and if the average inflation is 5% per year then he will lose 62% in 20 years, and one of the reasons why they do not feel it is because what is reduced is the value and not the amount of money.
In the psychological point of view of humans it is more afraid of losing the figure directly as it happens in investments if the price of the asset falls then the amount of money they will obviously be seen reduced, even though it is not a permanent loss during the market move. So the problem lies in the fact that most people look at the numbers and not the values.

Inflation is a real and the decline in the value of currency is an ongoing process it is simply a condition we must face. To protect our wealth from the effects of inflation, it is wise to pursue safer investment options, engaging in small scale trade to preserve assets  placing funds in a bank deposit that offers an annual interest rate of around 7%, or choosing investments that yield an annual return of 12%. In my view, this is a more prudent and secure approach to financial management. Conversely, many people take an overly aggressive stance in their pursuit of profit, sometimes placing their money into investments with returns exceeding 20% a high risk for investor.

[Out of mind]

When people keep money in the bank, they do not have any worries, they think that they may not suffer any loss in the future, but due to inflation, people do not worry about this issue at all. However, when someone invests and faces a small loss due to negative market performance, they get worried. Basically, people behave differently in two places, there are many who do not know that they are losing money due to inflation, but very few people do not want to keep money in the bank due to inflation. When the value of fiat currency gradually decreases, due to inflation, they have to face losses in various ways, but many common people do not want to understand this, and this loss is not recovered later. However, when you invest, if the market is negative and there is a small loss, you will recover it later. So every person should understand that inflation is a lot of loss, but even if it is a loss in investment, there is hope of profit later.

[Dreadboost]

Yes, there may be some loss due to temporary changes in the market but that market becomes positive again, but why don't people worry about the amount of value they are permanently losing in fiat due to inflation. I think the permanent loss of inflation is much more serious than the small loss of investment.

It takes one to be an economist to understand the dangers of inflation. Many persons are not aware of the shortage in value when they keep their money at the bank. Some are also not aware that banks use their money to enrich the company. The more their money stays with the bank, the more value the banks get and the more loss of value for the person.

To every adult, financial education is very important. Wealth is not made by having lots of business that gives money. One can have big businesses and still not make wealth. Wealth is made and maintained by managing finances and resources.

[fighter2627]

I think even if the average inflation rate in any country increases, most people will still think more about investing for them to survive, because we know that inflation
will not disappear in all countries.

And the increase in the inflation rate depends on the leader of each country. Meaning that investment is only there to be a solution for us so that we can produce
earnings of us to sustain the things we need.

[cxtreenal]

We do not understand the depreciation of our savings or cash funds due to inflation. But we panic and sell due to small losses due to investments. The harmful effects of inflation on a country's economy are very slow and the effect reaches the individual level with even less speed.

The depreciation of fiat due to inflation is due to the effect of increasing the price of goods in the local and international markets or the strengthening of the dollar against the local fiat.

[sunsilk]

It is a sad fact that we have no control with. Even if you're a higher earner from any of those countries, you'll have to deal with it still due to the incompetence of the government.

All of the actions that affects the economy will be passed to the citizens whether it will be good or bad.

But for most, if it's high inflation then that reflects how terrible they're doing with the country.

Corruption is the very reason why inflation is high for certain countries. And the government simply conveys a message that its people are on their own.

If only we could easily leave the country we would, but if we are stuck there we have no choice but to find a way to survive. Even in our country the leaders are corrupt, and my way to survive without being badly affected by inflation is to find an online job that pays in USD, that has been what I've been doing for many years already and I'm surviving, so thanks to the online opportunities, hopefully the time won't come when they will disallow us from using the internet, I'm just overthinking.  

That's one solution of fleeing the country but, you can't also be sure if the next country you're going to isn't dealing much with inflation.

Most of the countries have this very the same problem. But for those who aren't experiencing that much are considered as the greener pasture.

And so, migration problems is what they're currently facing because they're limiting migrants to come to them even with more opportunities.

They want their people to take of that advantage and opportunities first before people from other lands going to them.

While for the internet opportunities, I hope so too that they're not going to limit and look after it.