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Inflation: Causes and Impact

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21 May 2021

Inflation Explained

Have you heard of the Weimar Republic? No, it is not West of King’s Landing as it were some mythical place in Game of Thrones. Zimbabwe perhaps? How about Venezuela? In the past two decades Zimbabwe and Venezuela have made the news in relation to how their currency collapsed and how hyper inflation impacted their economies.

We are not at that stage in the UK and US so you can breathe a sigh of relief. In this article we will take a look at what inflation is, how rising inflation can have an effect on your portfolio as an investor and the economy at large.

As always this is not financial advice and you should seek advice when necessary.

What is Inflation and why does it happen

Inflation is the rate at which the cost of goods and services increase over a period of time. In other words, it is the decline in the purchasing power of the currency in a particular country or region.

This means for a number of items or particular service in an economy, you will need a bit more money to purchase those same goods or service in a few years.

For example an inflation rate of 2% over a period of a year means the same item you bought last year would cost 2% more. Let’s say a cup of coffee costs $2 in the previous year — if the inflation is 2% higher compared to the last year, it will now cost $2.04

What causes Inflation and where does it come from

An increase in the amount of currency in circulation is the cause of inflation and this is observed in different ways in different economies. When money is printed by the Central Bank for various reasons, the money supply increases and a consequence of that is the value of the money is lower. The currency is devalued so it will require a more money to purchase the same assets over time.

You may argue that the price of an asset is inflated to an extent in the sense that a house has not gone up in value by $20,000 five years for example, but rather you need $20,000 more money to purchase the same house.

With more money slushing around in the economy, debt is cheaper so people borrow more and spend more in places such as the stock market, crypto currencies or whatever takes our interest.

Excess money supply is not the only cause of inflation and here are other causes of inflation.

Demand Pull Inflation: Causes and Example

In this situation demand is growing faster than supply and results in an increase or ‘inflation’ in prices to meet demand. This rise is driven by consumers because the demand for a good or service is greater than the supply. Subsequently when the good is available, consumers are willing to pay a bit more for the products thereby inflating the price.

Cost Push Inflation: Causes and Example

With cost push inflation, the price of the good or service dramatically increases due to increase in the cost of raw material, or production. This causes the supply of a product or service to diminish and with low supply but an increase in demand, prices can and will rise.

Devaluation

When the Central Bank prints more money via Quantitative Easing or any other mechanism, it can lead to inflation as more money is available, low interest rates and easy cost of borrowing, more consumers will take loans and spend the money, thereby increasing prices. There is a large supply of money so as spending increases, the target asset inflates in price.

Which Inflation Rate is good

Most Central Banks aim to have an inflation rate of between 2% and 2.5%. A small amount of inflation is beneficial to the economy and this amount will vary depending on the state of the economy and other factors.

Keeping inflation at the desired rate is a balancing act the Central Banks try to maintain. However things do happen in an economy that cause inflation to rise.

There are a number of effects that can be seen in an economy when inflation is high.

$1,000,000 is not what it used to be: Rising inflation means your money will not go as far as it should because the purchasing power is reduced.
People spend or and invest: With the knowledge that money is reducing in purchasing power, more people are eager to spend it or invest it in an asset. Each passing day, cash loses value and for businesses that need to make large purchases this makes a difference.
May cause more inflation: As more people are spending, if demand grows faster than supply, it can cause more inflation.
Higher cost of borrowing: People and businesses that needs loans will need to pay more for borrowing.
Wages: Workers are likely to demand more wages to keep up with the cost of living due to the increase in inflation.

How is Inflation Measured and Controlled

The rate of inflation in the US is measured using the Consumer Price Index. The CPI measures the weighted average of the prices of basket of goods and services that a consumer will need. This includes food, medicines, travel and other necessities. CPI is calculated by taking the change in the price over a period of time for those same items.

Another index that can be used is the Whole Price Index or WPI. This examines the wholesale prices of items even before it gets to the consumers.

Inflation rate = (Final CPI Index Value) / (Initial CPI value) * 100

Depending on the cause of inflation, there are number of things the central bank can do to control inflation. If the sharp rise in inflation is caused by a weakness in the currency, the Central Bank may choose to print less currency.

If it caused by a super abundance of money, interest rates could be raised in order to curb spending and encourage more saving.

Can Inflation be reverted: Will it go on forever

Inflation is useful in an economy because there are benefits when inflation grows. Depending on the cause of inflation, the economy can experience some much needed growth especially during a recovery from a recession.

When inflation is getting high, there are a number of measures the Central Bank may decide to take which include reducing the rate of quantitative easing or raising interest rates.

Inflation cannot go high forever because it will lead ultimately to hyper inflation and history has shown that does not need well.

In the end the economy will default, violence may well ensue and the government will need to come up with a way to determine the value of their currency.

Can Inflation be bad and when it is a problem

Inflation is a balancing act and the Central Bank aims to meet its inflation target that will work for the economy. A low inflation rate can be bad for the economy because it can denote a lack of demand in the economy. If consumers are not eager to spend, business will suffer and begin to fail which will lead to unemployment, stagflation or even deflation.

A certain amount of inflation is not bad and is necessary however if inflation rises rapidly over a short period of time, we can have another situation where unemployment will increase as the cost of doing business goes up and businesses may decide to cut staff to manage costs.

How to protect against High Inflation

An inflation hedge in this sense means you take steps to protect your portfolio from the negative impacts of high inflation. Here are a number of ways you can hedge against inflation.

Real Estate

High inflation has a positive effect on asset classes such as real estate because the value increases so having some of your portfolio in real estate will is useful in protecting long term against inflation.

Stocks

The stock market can be positively or negatively impacted by inflation and you the aim is to look for companies that will benefit from a rise in consumer prices or from a weaker currency and invest in those as hedge.

Gold or other Precious Metals

Gold is a store of value and investors usually move their money to gold when inflation increases. You can own gold via an ETF so you do not have the physical gold but if you can have physical gold, well, that is just grand.

Floating Rate Bonds

A Bond will usually pay a fixed payment for the duration of the Bond however with a floating rate bond, the payout increases as inflation increases.

TIPS: This stands for Treasury Inflation Protected Securities. They are government bonds and protect from inflation as they indexed to inflation so if inflation rises, the interest paid out will increase too.

Inflation with low Interest Rates

Interest rates are a way the central bank can manage inflation. When interest rates are low, generally there is growth in the economy and inflation increases as a result.

To reduce the rate of inflation, interest rates can be raised and when that happens, growth can slow down. There is an inverse relationship between inflation and interest rates.

How Inflation affects Businesses

Business cover different sectors of the economy and a high rate of inflation will affect businesses differently. In a situation where inflation is driven by high consumer spending, businesses providing the service to consumers can benefit.

If the cause of inflation as a result of cheap money and low interest rates due to the Central Bank printing more of the currency, companies that purchase products or inventory can see their performance impacted as money loses its purchasing power.

Situations like this make it difficult for businesses to plan because of uncertainty. Some may stock up on products or cut staff to keep costs down.

How Inflation affects the Stock Market

The stock markets consists of different types of companies across a range of sectors and as an investor, depending on your investing strategy you choose to employ, rising inflation may be good for you or may not be. Let us consider a number of examples.

If you are have adapted an income investing strategy or one that focuses on dividends, during periods of high inflation, stocks that pay dividends may be more attractive to new investors because they tend to be cheaper. Remember dividends are paid in cash and with high inflation, cash is losing its purchasing power so as you can imagine, some investors would rather not have these stocks in their portfolio.

With lower interprets rates and more money in people’s pockets, the money often ends up in the stock market or crypto as we have seen in more recent cases. Investors have money money, the cost of borrowing is cheap so investor look to spend that money in the stock market.

It is difficult to decisively determine how inflation will affect the broad market and a prudent investor should look each company on its merits based on their investment style. Growth stocks will behave differently to value stocks during high inflation and one thing that can be seen from the market is that there is increased volatility.

How Inflation can affect Real Estate

When there is cheap money or excessive spending and inflation rises as a result, many investors tend to invest in asset classes such as real estate because of capital appreciation. The value of the currency is weaker so you need ‘more’ of it to purchase the same asset such as Real Estate.

Investing in Real Estate is one of they ways investors protect their portfolio against rising inflation because the value of the Real Estate increases with high inflation.

Looking at the broader market, Developers will see their costs go up due to a weaker currency and rising cost of materials. As home building costs increases, houses may be less affordable for many people so an investor with a number of properties can see gains in the property value during this time.

How Inflation can affect Bonds

To understand the effect of high inflation on Bonds, let us remind ourselves of what a Bond is and how it works. Using a simple example, when you purchase a Bond there are three main parts. What you pay for it, when it matures and how much interest you get each year.

So if you purchase a Bond for $100 at 5% interest for 5 years, it means you pay $100 for it and each year for 5 years you get 5% of $100 which is $5 a year for 5 years. At the end of the 5 years or maturity, you get back your $100 but in the meantime you have eared $5 a year for 5 years which is $25.

As inflation rises, your payout which is in cash is worth a loser amount because inflation has diminished to an extent the power of your $5 payout. Bond yields will be the same but the value of what you are getting will be reduced due to inflation eating into it.

One way to protect against this is by investing TIPS, aptly named Treasure Inflation Protected Securities and they are designed to eliminate the risk of lower returns due to high inflation.

How Inflation affects Cash

Even in times of low inflation, money is certainly not the best asset class as a store of your wealth. As we have covered in our article Wealth vs Money, money is or should be a temporary store of your labour not the final destination.

Inflation reduces the purchasing power of your money so it is the least desirable asset class to hold especially during inflation or to protect from the effects of inflation.

How Inflation affects Gold

Apart from Real Estate, Gold is seen as a good hedge from inflation. For thousands of years Gold has been seen and used as a store of real wealth and this is especially true during inflation. The price and value of assets rise during inflation and Gold benefits from this.

Final Note

Inflation measures the increase in the cost of a number of items over a period of time. The inflation rate is expressed as a percentage and reveals the increase in cost.

The most common way inflation is measured is using the CPI – Consumer Price Index which is a basket of a number of items that are deemed necessities. The price of these items are compared from the previous period and the current period and expressed as a percentage.

There can be one on multiple causes of inflation and while a certain amount of inflation is necessary to maintain a healthy economy a high inflation rate can negatively impact the economy with rising prices, and the need to increase wages to maintain the same level or quality of living.

Businesses may need to cope with any extra costs by down sizing or taking other measures to protect themselves.

Different industries will see different types of impact depending on the cause of the inflation and as a result will reflect differently on their stock price.

Inflation has different impact on different asset classes. Real Estate, Gold or TIPS perform better during inflation including Value stocks.

Bonds that are not adjustable and cash are negatively impacted by rising inflation because with Bonds, the realised payout is less due to high inflation and cash is just bad as its value goes down each day. The value of the cash is determined by what it can buy and with inflation, it can purchase less and less hence the weaker purchasing power.

Inflation benefits investors how have assets and those who have hedged their portfolio with adequate financial instruments that product against it. When it comes to pay rises, it should at least keep up with inflation otherwise what you are getting on paper and what you can actually purchase will be different.

Inflation is not bad thing and in many ways is a balancing act. The lesson is to be on the right side of the scale so regardless of what happens the economy, it tips in your favour.

The Difference Between Money and Wealth

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1 May 2021

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Money and Wealth, are not quite the same thing and the results from a simple search will show why there is some misunderstanding about what these are. A good way to understand this distinction is to determine if gives you more money or it frees up your time in addition to giving you money.

In our illustration we will create a fictional character James and if you happen to be reading this and your name is James, the story ends well so keep reading.

What is Money

James has a white collar job, works 50 hours a week and as expected he gets paid a the end of the month. James gets paid cash in his bank account for however many hours and days he worked in the month so his labour is represented by that salary. He has traded his time for money. This leads one of the ways you can define money.

Money can be defined as a temporary store of your labour

If James leaves some of that money in the bank as cash for a long period of time it will not be able to purchase the same thing in a few years from now. It will lose its purchasing power due to the effect of inflation on money.

Money loses value over time

James spends some of the money from his wages on living expenses and a number of holidays during the year. He realises he needs some travelling gear and a suitcase so he purchases a travelling bag paying with the money he has saved. This transaction can be see as an exchange of value. Through his purchase the seller has earned some profit on the item they sold to him and James now has the bag he needs to travel.

Money is a medium for exchanging value.

Considering we are not in the Middle Ages or ancient times, money is the medium of transacting. In many cases if James wants to buy a car, clothing or groceries, he can pay cash rather than offer some alternate form of barter. Money can easily be translated to any form of value or service he needs since it is widely accepted as a medium for transacting.

Money is Liquid

As a shrewd individual James follows Wealth Sigma on all our platforms and over time he has gained insights on how to invest better. He decides to use some of this savings to purchase a property and rent it out on short lets or as a serviced apartment. One of the reasons he chose to do this is to earn some rental income and see the value of the property go up over time.

Money can buy Wealth but is not Wealth.

James may choose to keep the property or sell it later and use the money to purchase another asset. This could be a commodity such as Gold, a piece of art or anything that can store value for a prolonged period. Completing this purchase means he has used money from the sale of an asset to purchase another.

Money is a way of moving Wealth

After the Second World War the US dollar was backed by Gold and to understand how the banking system works, we need to see how people transacted goods and services. In ancient times, commodities such as gold or anything else that was a considered valuable was weighed against fruits and other small objects in order to determine how much they are worth.

To minimise the risk of losing your precious commodity due to theft or carelessness, you would deposit it in the care of a credible third party and was issued a promissory note – a piece of paper allowed you to buy goods or services with the equivalent of the commodity, in this example gold.

Wealth can be considered as gold while the piece of paper that gives you access to trade the value of that gold, as Money. As long as your money is backed by gold, technically its value it tied to gold, but we know this is not the case today. Long story beyond the scope of this article.

What is Wealth

Continuing our story, James has now acquired several rental properties that generate money at the end of the month. In addition to that, he has decided to buy shares that pay a dividend and with the little time he has, he teaches people how to buy property and avoid any pitfalls.

Wealth is having assets that generate money for you.

He has both physical and digital assets that produce money to because he has seen an opportunity to solve a problem or meet a need. He has created a course where he shares knowledge on how to buy properties. James looks for properties that are derelict, brings them back to life and sells them for a profit or rents them out long term.

Wealth is obtained by creating value

James has been closely watching certain neighbourhoods and noticed several developments have been announced so he buys even more properties in that area. James sees an opportunity in commercial real estate as more people are returning to the office since the effect of Covid-19 is subsiding. Over a period of time these properties are going up in value as more people invest in the area, move into the area to live and work.

Wealth if invested properly gains value over time

As James’ investments have good returns, he is now able to leave his job, register a Company, hire a small team and spend his time the way he chooses. He spends a bit more time with his children and makes more time to work out. He has the freedom to decide how he spends his time.

Wealth is measured in time not in currency

Unlike money, James cannot use his property or his investment in precious metals in exchange for a service. If wants to pay for his holidays, he needs to pay for it with cash and depending on the assets he has, it will take some time to sell it and obtain the cash from it.

Wealth is illiquid

On his return from his holiday, James is looking to diversify his investment portfolio, so he purchases more art, gold, adds bonds to his portfolio, some ETFs, creates more courses and in this process he creates more value to people.

Wealth is an abundance of valuable possessions

Final Note

Creating wealth is a process that can take time and the results you get will depend on how much money, knowledge and time you can have in addition to other factors. Using our fictional character James, we can see how he moved from working a regular job, to creating value hiring people and being in control of time and other resources.

What should be evident from this is the transition from having, to knowing and then doing. As you advance in your wealth acquisition, you are likely to have more illiquid assets such as precious metals, art and prime real estate. Use your time and effort to do what matters. Getting money is good but is only a start. The ultimate goal is to build Wealth.

Working Hard is Not Enough

Living the Life

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26 April 2021

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There is no substitute for hardwork in any worthwhile endeavour because in time, our hardwork will produce results that can be improved. At some point in our lives we will know of people who have started something but have stopped long before they reached their goal. This can include business they being or projects and in the end they have not accomplished that goal.

Not accomplishing a goal the first time round or the thousandth time is not failure and I would to think some thought goes into the reason for the minor setbacks between the first try and the thousandth otherwise we are bordering on insanity here to say the least.

What I have found from listening and interacting with people who have failed in some endeavour is that they are hardworking and dedicated. They gave up their time, resources and many other things to pursue the goal and to focus on that one thing but as fate will have it, failure was the outcome.

Questions and More Questions

So it begs the question. What did they do wrong? Before you embark on any project it is important to bear the following things in mind because anything done for the first time will not be perfect and naturally, effort is required depending on ability, to traverse the learning curve and begin to see results.

Asking the right questions and reflecting before beginning an endeavour is a good place to start as it helps with improving focus and removes any distractions.

Attending seminars, speaking with experienced people in what you are looking to do, getting advice, having your idea scrutinised and examined are part of the process and while all of the points above may not be relevant, find out what is relevant and apply it.

You should be in contact with people who have walked that path and have a level of success. Why? Because they have paid the price for that success and you can leverage their knowledge and experience.

Why

One of the questions to ask is yourself is why. It is necessary to understand why you chose that endeavour to help determine if that goal is worth it and how the route you have chosen will get you to your goals. Your real wealth is your time and freedom and how you choose to spend it.

Not being able to choose how your time resource is spent can be seen as a form of want. How we choose to spend your time is lot more than going on holidays and while rest is important, we can derive satisfaction by giving back to our communities in one form or the other. We can spend more of our time with family, friends, doing charity work or enriching ourselves.

What

Another important question to ask is the ‘what’ in as much detail as possible so you pay the right price. If you want to be successful in Blogging, immerse yourself in it. You want to be a successful Copy Writer, or you wish to start in e-commerce or be a Designer? Whatever the case may be it is necessary obtain as much relevant knowledge as you can. Malcolm Gladwell’s book Outlier comes to mind and it is a good read.

You will not know everything to start in the beginning but you will know enough to prevent many costly mistakes and more importantly rather than working hard paying a price, you working hard paying the price.

What is ‘the price’ in this context? Consider this example. If you want to be a Day trader (i.e trading financial instruments), you need to acquire the relevant knowledge and this takes a considerable amount of time.

You read books and follow the markets, understand the financial instruments you want to trade, you learn about fundamental and technical analysis, develop a strategy, open a practice account, get a mentor, have a risk management plan in place and the list goes on.

In this context, working hard by attending seminars on its own or reading one or two books or even ten will not cut it. Are you hardworking? Yes however have you paid the price to succeed in that thing you want to succeed in? The answer is most likely to be no.

Other Points

It is important to keep track of what you have learnt because you can revisit things you learnt and applied that caused you to progress further in a shorter period of time.

Outline the with the help of mentors and obtained knowledge, the required steps to accomplish your goal. Once you know have this, work on it until you see results. Understanding and setting the right goals is the price to pay to be successful.

Final Note

Being successful in a endeavour goes beyond the desire to be successful. It requires planning, sacrifice, hardwork and an element of luck. Before you decide to go out there and do what you think it takes to succeed, it is critical that you obtain information and guidance from relevant people and sources.

The outcome of this will help you determine what needs to be done, how much work is required and how to devise a strategy. Work hard doing what it takes so succeed in the venture rather than assuming what you think it is. This is a costly mistake and time lost will not be recovered.

Benefits of Exercise

Living the Life

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12 April 2021

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Unless you have been living on a different planet, you would have come across a picture, an advert or something that reminds us of why exercise is important.

So what are the benefits of exercise and what type of exercise should you be doing and how often? In this article we will explore a few of the key benefits of exercising and why it is important aspect of our lives.

Exercise Benefits Your Body

There is strong evidence that shows people who are physically active tend to live healthier lives because of the reduced risk of getting long term diseases such as stroke and certain types of cancers.

Staying active reduces blood pressure, improves your memory and mood. Stress is a challenge in our lives due to work and family commitments and in many cases it is easy to see exercise as a waste of time or something that does not need to be done as often.

Exercise can help relieve stress and help us focus on the matters at hand. The time spent running or doing that activity is time that can be well spent planning and prioritising. Stress has its effects on the body and mind and there are few programs such as Mindfulness, and others to deal with stress. Exercise and keeping fit can be a ‘low cost’ alternative.

Exercise increases you heart rate as more blood is pushed in your circulatory system. Exercise makes your heart stronger and whilst this is not something you can see, you can feel it. Not to mention you are rewarded with endorphins after intense exercise.

Outwardly speaking, the benefits of exercise are obvious in your physical body because you are likely to be in shape, be stronger, flexible and not to mention, lose weight.

More often than not, the motivation for a lot of people to exercise is to have a beach body, or to fit into that dress or suit and whilst these aims are good, it is important to develop a lifestyle that incorporates exercise – you never know when you’ll be given short notice to attend a wedding.

Social Benefits

Gone are the days when you would run or do some activity by yourself and keep no track of your activity or have anyone to share it with.

These days there are hundreds of fitness apps that monitor your activity and even connects you to people who share the same platform and passion. It presents the opportunity to join a club around that activity, get out of the house, meet new people and see where the relationships can go.

It is not surprising that people engage in a fitness activity and as time goes on, job opportunities, mentorships or other type of opportunities become available.

What Type of Exercise Should You Do

There is no easy answer however there are options and it depends on your age, geographical location, hobbies, and responsibilities.

Playing football with your friends can work however you are prone to injury from a careless tackle and that can disrupt you from being able to do your job properly or carry out your responsibilities at home.

The same can be said of playing a sport like basketball, badminton, tennis or anything else that you may be interested in. It is important to note however some sports are not physically demanding and it is necessary to have your heart rate raised for some time so depending on your age you may want something a bit more involved.

Jogging is one of my favourites because I can do it at any time of the day (try to avoid when it is dark), pretty much all year round and an intense ten minute run is already beneficial to me. I do not need equipment so start up costs are minimal as it were and it is something that can be done alone or with people.

Cycling is another way to keep fit and in many ways is goes beyond that. It is a means of travel, a good way to explore places and even spend time as a family. I recently came across Zwift – I think it is a great product especially during lockdown.

Cycling is an activity that can be done year round, indoors and outdoors. Rowing indoors too is another that comes to mind.

While is important to be fit, it is more important to enjoy the process and the activity. If you have underlying health conditions or have not exercised intensely for a while, it is a good idea to seek medical advice just to make sure everything is in working order so you are not causing any damage to yourself.

It is best to choose activities that suit your lifestyle so that you are keeping fit but not stressing about it. At the end of the day it is something you need to enjoy rather than dread.

Costs Associated

There are some costs associated with keeping fit and depending on the activity, the costs can be significant. Cycling for examples – those bikes are not cheap however you do not need to start with an expensive bike.

Safety is important so it is necessary to have the full gear; helmet, glasses, gloves, clothing, shoes and other accessories that will make you more visible to motorists and other road users.

If you track your activity on an app you may need to upgrade to a premium version depending on what features you use and those that are relevant to you. If you are an avid runner and participate in marathons, you may need to travel from time to time so all these are potential costs.

The costs are not mandatory and do not stop you from realising the benefits or keeping fit. A simple jog, tennis game when the weather is pleasant or even something as ‘easy’ and ‘free’ as going for a walk is beneficial to you.

It goes without saying you need to have rest days or rest weeks where you allow your body to rest. It is also important to give your body the nutrients it needs to function properly whilst you exercise and rest to replenish what has been used.

Final Note

Exercise is beneficial both mentally and physically and in our busy lives it is necessary to fit exercise in our schedule so that we are mentally and physically in top shape.

Studies have shown exercise improve the quality of our sleep, our memory and brain function, reduces the risk of getting diabetes and certain cancers and is good for our mood.

Our bodies become stronger, our health is more effective in pumping blood, cholesterol and blood pressure drops as we exercise frequently and not to mention, we can at a moment’s notice go for a wedding and find that with little effort, we can fit into that dress.

There are different costs associated with keeping fit and it can become more expensive as the activity goes from being done to stay healthy to something that becomes a hobby. There is no need to go broke over staying healthy so apply balance and enjoy the fitness activity of your choice but be consistent.

Exercise allows you the opportunity to network and meet people who can challenge you to be better or people who are inspired by you.

Dealing with Loss

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12 April 2021

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There are a number of things we experience in life that sweep us off our feet, cause us to react in ways we did not think possible and have an effect on us for the rest of our lives.

Loss is one of those things and in this, article we explore different ways to deal with loss. Loss is defined as the process or act of losing something or someone; our approach will be looking at the aspect of losing someone.

One of the signs of progressing in life is the loss of people around us and by loss, we mean death. Being reminded of our mortality and what lies after is something some of us tend not to be interested in for various reasons such as I am young, or I do not want to think of negative things or things along those lines.

Whether or not we choose to be reminded, it is something that is all around us and it does not have to be negative. There are a number of quotes that come to mind to help put things in perspective. One is a scripture that says it is better to go to a funeral than a party because death is the destiny of every man – what a thought eh?

Regardless of the circumstances, loss happens and we are either directly impacted by it or indirectly through the people we know who are going through a difficult time. What is the best way to deal with loss and what is the best way of dealing with the process of losing someone or something you love?

Take Your Time

It is a process and in many cases, a long process and the toll a loss can have on you is not immediately understood as there are different phases in this process so this is why you need to take your time to come to terms with how you are feeling.

In situations where the loss was sudden, the shock alone can take a days if not weeks so allow yourself time to come to terms with what has happened. It normal to seek answers as to why it happened. In someone other cases the process of loss is slow and we dread the final day where we can interact with the person. This can cause anxiety, worry and emotional fatigue.

Speak with the Right People

It is not uncommon to shut everyone out and be by yourself when you are going through a loss and while this is an attempt to try and make sense of the situation, you also need to speak with the right people.

Be honest about your feelings, tell them how you feel and if someone going through loss reaches out to you, make yourself available and listen to what they are saying. It may not make sense to you but it helps them with coming to terms with what has happened.

Speaking with different people should also help in this process and it includes bereavement counsellors or family members or close friends. Take your time and verbalise how you feel and what your plans are for the future too as it will help you look forward.

The Memories

The memories shared with that person or pet you have lost can literally bring a smile to you face. Think of the memories as investments into you future that are now paying off.

That photo, that part of the house or the garden or the car, or the restaurant or whatever it was you shared with that person, think about those moments as they are a source of strength.

Stay Active

Exercise is beneficial in times like this and in our article we discuss some of the benefits. Going for a walk, a jog, cycling or whatever it is you do will help keep you in good spirits.

Being active is good for your mental wellbeing and you need to be in a good frame of mind to deal with the aftermath of the loss. You can be active with someone, or with a club too as that will help you meet people with similar goals and your recovering process can continue. It is also important to get good rest after being active. You can read our article on how to get good rest.

Change your Environment

As much as you want the memories, sometimes you need to change the environment. You may need to change your furniture or redecorate depending on what the circumstances are.

Having a change of environment albeit gradual in your home for example or just travelling somewhere for a number of days allows you to unwind and rest. It takes your mind away from the situation and exposes you to a new environment and potentially new experiences that will keep your spirit lifted.

Try Something New

In the moment of grieving and dealing with loss, it is not uncommon for you to make decisions seemingly on a whim but, it is a good idea to try something new so take some time to think about it.

Trying something new can help with the process of dealing with loss and this new thing could be a new hobby, cooking, dancing, going to shows or anything you may not have done before.

Be careful to ensure you are ready to be in a relationship during this process because there is an element of vulnerability and the last thing you want is someone taking advantage of you. Try new things yes. Exercise caution, absolutely.

Get Counselling Early

This point is very critical to your recovery. From experience I discovered that if counselling is not done at an early enough stage, then the need for it tends to dwindle because each time you go, you are reliving a moment you a trying to get away from.

For the counselling to be effective you will need in many cases to narrate what happened and how it made you feel. Two or three weeks into the event is not that bad however a few months down the line, having to narrate the whole thing and how I felt about it has the effect of dragging me back to a place I am trying to move from.

This may not be true for every situation and everyone is different and handles loss in their own way and that is worth bearing in mind.

Look to the Future

There is always another day so while you take time out to heal, think of tomorrow and the day after. Ultimately life goes on and depending on what your responsibilities are, you may have children, co-workers or other people who depend on you.

Looking to the future can help you remain accountable to yourself with regards to how you live your life and what you will like to be remembered for. You can make the decision to be the best version of yourself and that includes every good thing you wish for yourself. This is the time to do it.

Live on Purpose and Focus

The truth is, the pain from the loss will not leave but we learn to live with it. One effective way to come back stronger from loss, it to decide to live on purpose. Your life is not an accident and you should not live as though it is.

Have a plan for what you want to accomplish and focus on it until you succeed. It is easier said and whilst that is true, it is an essential part of recovering from the effects of loss and leading a successful life.