So isInflation is a transcendental variable, since it affects economic functioning in all areas and erodes all areas in the life of a nation.
There are the officials directly involved in its control; however, no one in public management is exempt from responsibility, even the behavior of the business community as a whole and the population influence in many different ways. In Argentina, inflation is not a transitory phenomenon, but on the contrary, it is a structural pathology. It is an insanity with which savers have to live and cannot neglect. Doing so means not only counting large losses, it can irreparably entail economic suicide.
This year, the Consumer Price Index (CPI), according to our research, will be closing around triple digits and there is no improvement on the horizon for 2023. An election year with all the waste and excesses that no one in politics is willing to resign.
Hence, savers should take two things into account, especially around the end of the year. In the first place, how to protect ourselves from the inflationary plague and, in another order of things, how to mitigate fiscal voracity.
Taking into account the context and perspectives, it is relevant to be clear that inflation can beat the dollar in some periodsas we could see in 2022. However, time and Argentine historical experience always show the US currency at the top, where it is vital to hedge against exchange rate devaluation.
Fixed term may have outperformed the dollar this year. But, if the analysis is done considering longer periods of time, we find that a saver in January 2016 with $1,000,000 could buy at that time $75,600. If he had decided to place that money in a fixed term, renewing principal plus interest every 30 days, today, with all the accumulated yield, he could buy US$ 40,500.
Make the reader his own conclusions. No one knows – of course – what the course of the different variables may be in the medium term, which is why diversification is always a strategy that adds peace of mind when we invest our savings.
The second aspect that eats away at the product of our efforts has to do with the tax gluttony, cardinal sin of our system. For this reason, it is essential to take into account that the liquid balances in the principal account as of December 31 are affected by the Personal Assets Tax, a tax that is almost non-existent in developed countries. Hence, it is good to note that we have some resources at hand to neutralize it or, at least, minimize it.
In this sense, the Argentine Public Securities -whether national, provincial or municipal-, fixed terms and savings account deposits opened in financial institutions in the country remain exempt. Let us also remember that the possession of Argentine shares does not pay the tax directly, since it is the company issuing the shares that pays it in its capacity as substitute responsible. Also, the possession of negotiable obligations, issued in national currency that have a public offer are exempt after Law 27638.
Finally, it is good to remember that having shares in Mutual Investment Funds, whose underlying assets represent at least 75% of some of the aforementioned exempt assets, will also be free of the aforementioned tax, the elimination of which has been promised so many times.
Considering an adequate coverage of the exchange rate -always taking into account profiling and diversification-, and using legal means to moderate the tax impact, will help us significantly to improve the value of our income.
Director of the Dipl. in Strategy and Financial Management and of the Dipl. in Cryptoactives and Digital Finance, Blas Pascal University.
Source: Ambito
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