Eastern Europe and the old Soviet bloc during the early 90’s is a perfect example of what happens with extreme fluctuation in currency valuation.
During that time, there was a great interest in the value of currency. Everyone, from the butcher to the beggar, was talking about money. I recall walking down the streets of Budapest when a beggar asked for some money to buy bread. Having been taught by a mom who insisted I help a person in need, I reached in my pocket, pulled out some Hungarian forint, and placed them it in her hand.
I will always remember what happened next.
She looked at the coins, and in complete disgust, spat in her hand and tossed the coins in the street while she murmured some vulgarity about the “worthless” government.
At the time, Hungary was suffering from hyperinflation – a condition where the price of goods and service steadily increased while the value of the Hungarian forint dropped. Nobody wanted Forint because the longer you held it the less it was worth!
There is a great lesson in this… Storing wealth in currency is a risk. Yes, you’re parents always taught you to open a bank account and save your money. While most of the time that is a good practice, there are times when a currency’s value changes.
Wealth is something we’d all like to build. It is something that we’d like to save once we acquire it. Wealth is stored in different ways, such as a savings account at the bank, but how you store wealth is just as important as acquiring it because contrary to popular belief, money is not free from risk.
In Hungary, the value of the currency dropped – nobody wanted forint – and so any wealth stored in the form of savings in a bank account was destroyed.
There was an alternative, however; German marks. While the Hungarian Forint was dropping the German Mark was going up! Anyone who stored their wealth in German Marks, not only preserved their wealth but expanded it!
Hopefully with this example, you can see how important an understanding of currency is to your wealth. If you want to be wealthy, you have a couple of hurdles you have to overcome… First is how to create it, and second is how to store it. Both are easy to overcome if you understand how currency works and the Apiary Fund is here to help you get over those hurdles!