With inflation rates rising and interest rates on the decline, regular income is decreasing in its actual worth. While there is nothing to do about inflation itself, investors can give earning potential a boost with inflation-busting passive income. Foundation Capital offers investment opportunities in the soaring medical, construction, and transportation industries that can help investors earn money with little maintenance, great security, and excellent returns.
Raging Inflation Leaves You With Less Spending Power
Inflation is making headlines around the world as it has risen from 6% to 9% in more than half of the economies. Rising prices in core areas of budgets and the consequent devaluation of the currency have left investors with a significant granted financial hit in the last two years.
Take Greece for example, inflation has risen to a record high of 12% nationwide and is expected to rise even higher in the upcoming months. Consequently, the income there is losing real-world purchasing power even as wages are reported to be rising at the fastest rate in years. As the Consumer Price Index continues to soar, if your regular income has not adequately increased, you are losing money.
For example, if you have €10,000 in your bank savings and inflation is at 12%, one year from now, your €10,000 will be worth €8,800 or less.
How Inflation Reduces Your Spending Power
(decreasing your capital by 12%)
|Your Net Spending Power|
|Year 1||€ 10,000.00||-€ 1,200.00||€ 8,800.00|
|Year 2||€ 8,800.00||-€ 1,200.00||€ 7,600.00|
As a result, if inflation goes unchecked, your capital reserves will inevitably be depleted. There are levers you can pull, in terms of jobs or spending, in order to diminish the impact of inflation. Nevertheless, most of these require major changes and cutbacks that are risky or excessive. Yet, when you find a sustainable stream to generate passive income from your capital, the problem can be managed.
How Passive Income Can Solve The Inflation Problem
There is a reason why the concept of passive income has gained significant traction of late. As a low-effort solution to investing, it generates an effective stream of income with little or no maintenance. Thus, passive income can assist you in keeping inflation and its impacts at bay.
In particular, in order to preserve your capital and protect it from being lost to inflation, you can use it to produce passive income, thus protecting and maintaining your spending power. For example, if you invest your capital in an income-producing vehicle delivering over 12% then you protect your capital and make a profit, thus increasing your spending power.
|Capital||Less Inflation (decreasing your capital by 12%)||Plus Rental Income (19%)||Your Net Spending Power|
|Year 1||€ 10,000.00||-€ 1,200.00||+€ 1,900.00||€ 10,700.00|
|Year 2||€ 8,800.00||-€ 1,200.00||+€ 1,900.00||€ 11,400.00|
Hence, income will not only provide you with liquidity for basic monthly essentials, such as food, energy, and fuel, it will also protect your capital and preserve it, and is therefore of the highest importance during this inflationary time. If you have passive income, your net spending power will be 50% higher than if you don’t.
How to Earn Passive Income with Foundation Capital
If you want to generate a sustainable passive income stream, industrial equipment for construction, transport and healthcare are the most reliable assets to invest in that deliver double-digit returns. Our process has been refined, perfected, and proven over the past 12 years of renting our clients’ assets to these industries.
For more detailed information on how to make a capital investment in construction with Foundation Capital, as well as the terms, conditions, and risks, refer to the following FAQs and guides:
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