These are the winners of high inflation
“Department store kings have drawn their fortunes from this time”
For companies, however, this is less a cause for concern than for the simple saver. Because while they pass on the risks to consumers in the form of higher prices, the real weight of the debt also decreases for them.
In addition, the industry has a physical equivalent with its machines. Especially in times of severe inflation, the capital of the companies was a security. “The great department store kings of Germany have drawn their fortunes from this time,” says Gebert. Although the temples of consumption also suffered from the loss of purchasing power of customers at that time, at the same time they were able to pay off their debts extremely quickly and, after the crisis, often owned the real estate in which they located their department stores.
Thomas Gebert is one of the most famous German stock exchange experts. For decades, he has been observing what is happening on the financial markets and is considered one of the pioneers of quantitative stock market analysis. The Gebert indicator developed by him is now used by many large investment firms as a reference value. Gebert recently published his new book “The Inflation Protection Guide”.
However, if the mood in the population tilts, there is another risk factor for companies. If inflation remains at too high a level for a long time, customers begin to limit themselves and companies can sell significantly less.
Property owners can rejoice
Fortunately, the current wave of inflation does not threaten hyperinflation like in 1923. Nevertheless, even today, homeowners are the winners of the crisis – and in a double sense. Anyone who has financed a property at a historically low interest rate in recent years can now look forward to a reduced debt burden due to inflation.
At the same time, many experts also expect rising real estate prices in the future. The apartment or house thus gains in value, while the actual burden of the debt decreases as a result of inflation.
So is real estate worthwhile as an investment in times of high inflation? “If you live in the property yourself, that’s a nice side effect,” says Gebert. However, real estate offers less protection against inflation. Because even if your own property increases significantly in value, the owner can only realize the return if he sells. “Real estate is therefore more worthwhile as a hedge for future generations,” says Gebert.
Real estate does not beat inflation
Renting out real estate is not worth it in many cases. In this case, the investor will incur further costs, such as renovations, renovations, administrative costs and property taxes.
In addition, the increase in the value of real estate is lower than that of other investments, says the stock exchange expert. “If you compare it over decades, we have about an increase in the value of real estate, which is on a level with inflation,” explains the stock market expert. So, in sum, the investor does not lose money, but he does not beat inflation either.