CHALLENGE Nº 5: ANALYSE AND CALCULATE PROFITABILITY IN AN INFLATIONARY ENVIROMENT:
Investing in Spain in an inflationary environment can be a complex and risky venture. However, with the right analysis and assistance, it is possible to identify profitable investment opportunities.
It´s important to understand how inflation erodes the purchasing power of money and reduces the real value of returns. To foresee and avoid cashflow problems, we should increase the initial implementation budget in at least a 10% to mitigate variations of costs due to political, economic or recession factors.
If such financial effort is not possible, at least the average inflation forecast should be accounted for and foreseen in the setting up and running costs and also on the income.
Assessing the level of risk and potential return associated with each investment is essential. Some investment options in Spain in an inflationary environment are stocks, real state and expat services, this makes it important to prioritise investments with higher expected real returns.
In conclusion, investing in an inflationary environment can be challenging, but with careful analysis and calculations, profitable investment opportunities can be identified. By using these strategies, investors can make informed investment decisions and maximise their profitability.