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Protecting your income against price fluctuations
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There is a need to protect the money income of individuals against the shocks of market conditions such as increasing prices of goods and services. This is because, the increasing prices has the potential of reducing it beyond survival level.
Recent occurrences in Nigeria and the world as a whole indicate an unsettled state of markets.
Reports indicate a high rate of uncertainties in financial markets, commodity markets and stock markets of the world, which in effect is strangling the money income of many people. For instance, in the United States people have expressed concern that the full extent of the credit crunch is still unknown, facts indicate the losses to be between $300 billion and $500 billion while only around $100 billion has been admitted to be lost.
Since money income is fixed as against price level that moves in response to demand and supply in the market, it is imperative on the income earner to protect his or her income from the changes that reduces the income earned.
In view of the uncertainties in the market place, what steps can one take to protect one’s money earnings from the price surges? There are different aspects one can consider, but a simple knowledge of the things one can influence and that one cannot, will give a direction as to what to do to protect the income earned from the vagaries of the market.
In essence, since wages are not reviewed in response to prices increases, neither can a single individual change the market conditions directly, little or nothing can be done in this direction.
However, what is in the direct manipulation of the income earner is his income that is reducing with rising prices. It is said that information rules the world, as such, the key issue here is to become better informed.
How, you may ask, where a individuals are conversant with market indicators, the chances are that those who heed the signs take advantage of the situation to make more money rather than loose while those who do not take note of market signals end up suffering or loosing. For instance, in the recent case of rice price increase, the market signaled the likely increase in the price but some consumers and sellers did not take actions to safeguard themselves but those who did are counting their gains as against losses for some in the situation.
A typical case of this research finding will make it clearer. Okafor Chike, a trader in foodstuff in Lagos told Business Day of how he had learnt of a likely increase in the price of rice which prompted him to borrow some money from his brother to increase his stock to about 50 bags as at February this year when the price was half the current price.
According to him, he informed his customers of the impending increase in prices advising them to stock this product in larger quantities but most of them did not take him seriously, because they felt his aim of telling them was to boost his sales rather than having their interest at heart.
This same people now come buy this commodity at double the price, regretting not having listened to him before. This goes to show the importance of studying the markets one operate in and getting enough information to guide ones actions in a bid to maximize the benefits from any transaction.
In the commodity, capital, and financial markets there are always signals of a down turn or boom, although experts say that there can be shocks, this possibility is known and ought to guide ones decision where the money income is concerned.
In the case of the U.S financial market, what is occurring is a credit squeeze, and there are already actions to safeguard the market from a credit crunch that may be imminent as an aftermath of the current occurrence. Commodity market trends on the other hand, is indicating more price fluctuations, how much safeguarding measures to be taken, get informed and take that action, Asian markets have said they will no longer export rice, they are the largest suppliers of this product in the world. Seasons come with their buying opportunities and money making opportunities, as well as that of losses. Information makes one ahead of ones peers, be informed, take advantage of seasonal surpluses and prevent loss of your money income.
Recent occurrences in Nigeria and the world as a whole indicate an unsettled state of markets.
Reports indicate a high rate of uncertainties in financial markets, commodity markets and stock markets of the world, which in effect is strangling the money income of many people. For instance, in the United States people have expressed concern that the full extent of the credit crunch is still unknown, facts indicate the losses to be between $300 billion and $500 billion while only around $100 billion has been admitted to be lost.
Since money income is fixed as against price level that moves in response to demand and supply in the market, it is imperative on the income earner to protect his or her income from the changes that reduces the income earned.
In view of the uncertainties in the market place, what steps can one take to protect one’s money earnings from the price surges? There are different aspects one can consider, but a simple knowledge of the things one can influence and that one cannot, will give a direction as to what to do to protect the income earned from the vagaries of the market.
In essence, since wages are not reviewed in response to prices increases, neither can a single individual change the market conditions directly, little or nothing can be done in this direction.
However, what is in the direct manipulation of the income earner is his income that is reducing with rising prices. It is said that information rules the world, as such, the key issue here is to become better informed.
How, you may ask, where a individuals are conversant with market indicators, the chances are that those who heed the signs take advantage of the situation to make more money rather than loose while those who do not take note of market signals end up suffering or loosing. For instance, in the recent case of rice price increase, the market signaled the likely increase in the price but some consumers and sellers did not take actions to safeguard themselves but those who did are counting their gains as against losses for some in the situation.
A typical case of this research finding will make it clearer. Okafor Chike, a trader in foodstuff in Lagos told Business Day of how he had learnt of a likely increase in the price of rice which prompted him to borrow some money from his brother to increase his stock to about 50 bags as at February this year when the price was half the current price.
According to him, he informed his customers of the impending increase in prices advising them to stock this product in larger quantities but most of them did not take him seriously, because they felt his aim of telling them was to boost his sales rather than having their interest at heart.
This same people now come buy this commodity at double the price, regretting not having listened to him before. This goes to show the importance of studying the markets one operate in and getting enough information to guide ones actions in a bid to maximize the benefits from any transaction.
In the commodity, capital, and financial markets there are always signals of a down turn or boom, although experts say that there can be shocks, this possibility is known and ought to guide ones decision where the money income is concerned.
In the case of the U.S financial market, what is occurring is a credit squeeze, and there are already actions to safeguard the market from a credit crunch that may be imminent as an aftermath of the current occurrence. Commodity market trends on the other hand, is indicating more price fluctuations, how much safeguarding measures to be taken, get informed and take that action, Asian markets have said they will no longer export rice, they are the largest suppliers of this product in the world. Seasons come with their buying opportunities and money making opportunities, as well as that of losses. Information makes one ahead of ones peers, be informed, take advantage of seasonal surpluses and prevent loss of your money income.
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