Inflation is one of the main reasons why people search for a geographical diversification of their assets. Investing in a currency where the inflation is lower than on your home currency is a way of minimizing your loss of purchase parity power.
Definition
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the price level rises, each unit of currency buys fewer goods and services; consequently, inflation is also an erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy. A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the Consumer Price Index) over time.
Inflation in Switzerland
In the graph displayed below we can see the how the inflation has evolved in both Switzerland and the U. S.
Both countries have very similar inflation rates until around 1970 - when the U. S. dropped the Bretton Woods system and left the gold-backing. After this point the inflation started rising uncontrollably.
*sources: www.admin.ch, www.bls.gov
The next graph shows in detail the inflation between 1971 and today - plus the evolution of the CHF against the USD (as shown in Switzerland -> Swiss franc (CHF)).
*sources: www.admin.ch, www.bls.gov, Bloomberg
The rise of the inflation rates in the U. S. clearly shows a connection with the devaluation of the USD.
In order to protect your purchasing power, you have to invest in a stable economy with a stable currency - and a Swiss annuity is the perfect supplement for the protection of your assets.
Contact us for more information on how to set up your Swiss annuity.
