Mar 30, 2022
You may have heard the term “stagflation” in recent days and wondered, what it is and why does it matter to me? Stagflation is the combination of a stagnant economy and inflation. Put another way, stagflation occurs when an economy’s gross domestic product (GDP) declines at the same time that the price of goods and services rises (inflation).
Stagflation can put a serious dent in your savings and traditional investments. Typically, when the ability to earn decreases, so do investor appetites. Worse, inflation can eat away at the value of existing gains. So, while it will still take more economic data to see if GDP is declining enough to warrant stagflation, now is a good time for investors to plan ahead.
Finding financial instruments that can act as a cash hedge or provide downside protection are great ways to counterbalance the potential for stagflation. To outpace inflation, investors must currently earn more than 7.9% APY on their investments. Here, cryptocurrency yield funds and alternative investments may help.1
Securitize offers this ability today. For instance, Securitize Capital offers investors a variety of cryptocurrency yield products and Securitize Markets2 offers access to alternative assets, which have traditionally had a low correlation with the stock market. Together, these instruments may provide investors with a way to counteract the inflation part of stagflation.3
Should the economy continue to slow, income earned from yield products has the potential to offset the increased price of goods and services. While risks such as a potential lack of liquidity should be taken into account, by using cryptocurrency yield as passive income, investors can focus on earning a living themselves. This way, if the economy slows down, you don’t have to.
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Trading cryptocurrencies carries a high level of risk and may not be suitable for all investors. Anyone wishing to invest should seek his or her own independent financial or professional advice. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose.
Securitize Markets is an SEC-registered broker-dealer, FINRA member and operator of Securitize Markets ATS, and an SEC-regulated Alternative Trading System (ATS).
Past performance is no guarantee of future results.