Three Strategies To Invest Profitably During High Inflation Periods In 2023

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Invest in Property during inflation

The ongoing economic uncertainty, coupled with high inflation and political instability, will likely persist in 2023. Many investors or first-time investors are now questioning is now a good time to invest. For solutions, we’ve crafted three strategies to counteract this and boost investor earnings in the upcoming year. By following the below strategies, you can continue or start to invest during high inflation periods.

Strategy 1- Invest In Cash During High Inflation Periods

Making cash investments is one approach to building your investment portfolio during times of rising inflation. With mortgage rates around 6%, cash investment eases the burden while growing your portfolio in the UK’s current economy. Cash investing during inflation makes your money work for you as the value of your property rises.

In nominal terms, cash investments frequently keep up with inflation while short-term interest rates are rising. You can retain funds in your account, seeing purchasing power diminish. Alternatively, invest in a completed buy-to-let property, both options yield lower profits. Optimal: channel funds into a high-yield asset for portfolio growth and increased rental revenue.

Explore our high-yielding cash investment option

 

Strategy 2- Off-Plan Investments

Off-plan properties are a great way to invest during high inflation periods. You can make your money work smarter for you and not be restricted by rising interest rates.

Investors purchase an off-plan property during the construction part of the building process. It’s usually purchased at a discounted price to the actual value of the completed state. By investing in an appreciating asset, your money will grow whilst interest rates decline- this is done through off-plan investing during high inflation periods.

 

Why invest in off-plan during high inflation

Off-plan investment during inflation offers capital growth potential as property value rises during construction. In the construction phase, especially in desirable and emerging areas, the investment’s value can significantly increase, yielding remarkable growth pre-completion. With this in mind, some investors choose to immediately put their property up for sale to make a profit.

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While suitable for swift returns, tenanting the property long-term yields higher capital appreciation for investors. Choosing precise investment strategies in high inflation periods leads to increased value and regular rental income for investors.

 

Should you purchase off-plan

Amid interest changes and rising inflation, more landlords shift to off-plan property for ongoing investment opportunities in the buy-to-let sector. With roughly 6% interest rates, investing in a completed buy-to-let barely covers costs, potentially yielding minimal profit.

 

Strategy 3- Staycation Investments During High Inflation

The third strategy is investing in staycation properties, this combines strategies one and two. Investing in staycation properties during high inflation coincides with the rising cost of living and plays into the rising demand.

Amid COVID, frequent travellers turn to staycations due to rising inflation and living costs. High demand for staycation rentals anticipated in 2023. Now’s prime to own a short-term rental property for rising demand and enhanced rental revenue potential. Go Outdoors’ survey found 48% of Brits Favor domestic over international travel in 2023. Among them, 56% cite “reduced budget due to the cost-of-living problem.” Moreover, the Ukraine conflict disrupts jet fuel supply chains, escalating demand, and prices for overseas travel. With limited overseas travel, higher demand for UK short-term rentals will persist for years ahead.

Learn about staycation property investment – click here to download our free guide The guide is A 10-minute read that could help you capitalise further on your investment decisions in 2023.

Is It Risky To Invest During Periods Of High Inflation?

Novice investors might question the risk of investing during a recession or high inflation. However, many acknowledge the housing market’s resilience in past challenges like recessions, Brexit, and Covid. Although facing economic downturn, the housing sector thrives, with rapid UK property value rise. Demand far surpasses supply. The UK’s current housing shortage is dramatically driving demand in several areas, including Manchester, Birmingham, Liverpool, and London. This presents a fantastic opportunity for investors in the buy-to-let market. Even during times of high inflation, when households have fewer disposable cash, housing remains a necessity. The next 10 years will likely not see a decrease in housing demand, with Covid-19 lockdowns accelerating this trend.

Every investment has some risk, and the level of that risk varies depending on the desired returns for the investor. Excessive inflations might seem risky, but property remains a top investment, especially during economic downturns. Many investors find it lucrative. Long-term investing means navigating economic changes for eventual benefits. Despite challenges, enduring investments yield lasting outcomes.

 

So, should you invest during high inflation periods?

So, should you invest during high inflation periods? Your response hinges on your investment goals. For long-term success, don’t let economic shifts hinder you; adapt strategies to overcome challenges. opt for strategy one, two, or three to counter rising rates and inflation, making your money work more effectively.

For in-depth strategy discussions, reach out to our investment consultants. They offer no-obligation, informal chats to aid 2023 investment choices.

Please email contact@advantageinvestment.co.uk or call 0151 433 9300 to talk with an agent.Quote this blog to receive a priority meeting – and discuss your options the same day.

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