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The Troubling Trajectory of Hyperinflation in Venezuela

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Presented by: Texas Precious Metals

The Troubling Trajectory of Hyperinflation in Venezuela

The Troubling Trajectory of Hyperinflation in Venezuela

The Money Project is an ongoing collaboration between Visual Capitalist and Texas Precious Metals that seeks to use intuitive visualizations to explore the origins, nature, and use of money.

Extreme shortages of food and power continue to ravage the country of Venezuela, and ordinary people have been paying the price.

With triple-digit inflation, that “price” is expected to continue to soar even higher. The International Monetary Fund (IMF), in its most recent set April forecasts, expects inflation in Venezuela to hit 481% by the end of 2016.
Even scarier is the estimated pace of acceleration – by 2017, the IMF expects Venezuelan hyperinflation to climb to a whopping 1,642%.

Our brains have trouble computing numbers of this magnitude, so we created today’s infographic to put things in perspective. We look at it from two angles, including a historical comparison as well as a more tangible example.

This Pattern Looks Familiar…

If the chart for the Venezuelan bolivar looks eerily familiar, it may be because its trajectory thus far is almost identical to that of the Papiermark during hyperinflation in the Weimar Republic from 1918-1923.

Although the Papiermark would eventually peak at an inflation rate of 3.5 billion percent in 1923, the pace of inflation started relatively modestly. It started in the double-digits after the war in 1918.

This is similar to today’s bolivar. In 2013 and 2014, the pace of inflation in Venezuela was increasing, but still confined to double-digits. Now things are accelerating fast, and if the IMF is correct with its predictions, there could be huge consequences.

Could hyperinflation in Venezuela ever hit the peak levels associated with Weimar Germany? It’s hard to say, but it’s not impossible.

A More Tangible Example

To put things from a more tangible perspective, let’s do the math based on IMF projections to see what may be in store for ordinary Venezuelans.

  • In 2012, one U.S. dollar could buy approximately four bolivars.
  • At the end of 2015, one U.S. dollar could buy 900 bolivars at the black market rate.
  • Based on IMF projected inflation rates, by the end of 2017, one U.S. dollar should be able to buy 90,000 bolivars.

Where things go after that is anybody’s guess.

About the Money Project

The Money Project aims to use intuitive visualizations to explore ideas around the very concept of money itself. Founded in 2015 by Visual Capitalist and Texas Precious Metals, the Money Project will look at the evolving nature of money, and will try to answer the difficult questions that prevent us from truly understanding the role that money plays in finance, investments, and accumulating wealth.

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Investor Education

The Top 5 Reasons Clients Fire a Financial Advisor

Firing an advisor is often driven by more than cost and performance factors. Here are the top reasons clients ‘break up’ with their advisors.

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The following content is sponsored by Morningstar
This circle graphic shows the top reasons for firing a financial advisor.

The Top 5 Reasons Clients Fire a Financial Advisor

What drives investors to fire a financial advisor?

From saving for a down payment to planning for retirement, clients turn to advisors to guide them through life’s complex financial decisions. However, many of the key reasons for firing a financial advisor stem from emotional factors, and go beyond purely financial motivations.

We partnered with Morningstar to show the top reasons clients fire an advisor to provide insight on what’s driving investor behavior.

What Drives Firing Decisions?

Here are the top reasons clients terminated their advisor, based on a survey of 184 respondents:

Reason for Firing% of Respondents
Citing This Reason
Type of Motivation
Quality of financial advice
and services
32%Emotion-based reason
Quality of relationship21%Emotion-based reason
Cost of services17%Financial-based reason
Return performance11%Financial-based reason
Comfort handling financial
issues on their own
10%Emotion-based reason

Numbers may not total 100 due to rounding. Respondents could select more than one answer.

While firing an advisor is rare, many of the primary drivers behind firing decisions are also emotionally driven.

Often, advisors were fired due to the quality of the relationship. In many cases, this was due to an advisor not dedicating enough time to fully grasp their personal financial goals. Additionally, wealthier, and more financially literate clients are more likely to fire their advisors—highlighting the importance of understanding the client. 

Key Takeaways

Given these driving factors, here are five ways that advisors can build a lasting relationship through recognizing their clients’ emotional needs:

  • Understand your clients’ deeper goals
  • Reach out proactively
  • Act as a financial coach
  • Keep clients updated
  • Conduct goal-setting exercises on a regular basis

By communicating their value and setting expectations early, advisors can help prevent setbacks in their practice by adeptly recognizing the emotional motivators of their clients.

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Curious about what drives investors to hire a financial advisor? Discover the top 5 reasons here.

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