My grandma lost all her savings, and it was the government's fault

In 1991, Peru was going through a monetary conversion triggered by hyperinflation and the unprecedented accumulation of external public debt. Peruvians called the 1980s "La Década Perdida" ("the lost decade"): poverty rates reached 55% alongside massive unemployment and food shortages.

During the 1980s, my grandma had her own small grocery store in Chancay, a village north of Lima. From that store, she started saving every penny she could for five long years. She worked and saved with a single goal: securing a proper retirement, independent of what her children would do in the future, from 5 AM to 8 PM, every day.

My father and his five brothers were already professionals at that time and could help her financially, but she was still strong enough to accumulate capital so she would never have to bother anyone about this matter later on.

Unfortunately, saving in Intis, Peru's national currency before 1991, was a very bad short-term bet. The government had made disastrous policy decisions during the 1980s: price and exchange controls, massive money printing and an international debt default. All of this happened under very complicated circumstances of domestic terrorism, specifically from the guerrilla group Sendero Luminoso, and natural disasters related to the El Niño phenomenon, which devastated Peru's critical fishing and agricultural sectors and drained one of the country's primary sources of real economic output.

In 1990, the newly elected president, Alberto Fujimori, implemented a macroeconomic "shock therapy" program to avoid bankruptcy and stop hyperinflation. The immediate measures eliminated price controls, removed subsidies on fuel, utilities and staples, and floated the currency against the US dollar.

In July 1991, the new Sol entered circulation while the exchange rate was set mathematically to drop six zeros:

1 Nuevo Sol = 1,000,000 Intis.

That buried all my grandma's hopes. All her savings, from one moment to the next, disappeared.

The monetary conversion was designed to restore trust in free markets, open up global trade and pave the way for a stable capitalist framework. Nevertheless, it hit the oldest generation heavily at that time.

My grandma was, in the end, lucky to have five children who could help her financially. But what happened to the grandmothers who did not have the same luck? I cannot imagine the level of despair someone would feel after a shock like that.

The lessons from my grandma taught me something extremely valuable. Since then, I have tried to be wiser in my economic decisions: to stay aware of the macroeconomic context of the country I live in, and to invest in assets that can survive similar shocks in the future.

Accumulating cash is not the sole option, as many people thought for a long time. For decades, the methods and systems to make independent investing decisions were almost exclusively held by elite groups.

Now, you can make investing decisions independently by following the frameworks of the best performing investors in history. I am currently building a product to reach this exact goal.

A tool I wish my grandma had before this disaster happened.

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