How Ignoring Inflation Can Cost You?

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Inflation, the technical term which is discussed by economists & experts all over is probably the topic largely ignored by the laymen under the pretext of being too technical. The recent rise in the inflation numbers from past few years has widely changed the budgets & financial objective of these large chunks of ignorant laymen leaving them clueless. Growing economy certainly offers you better income opportunities but it would never suffice if one is ignorant about keeping track on the elements eating on it.

How deep has it affected your lives?
Inflation that augments the cost of everything from food to films is leaving a deep hole in your pockets. A simple example would be the impulsive increase in the percentage of your salary being spent on your travelling expenses. Its impact can be felt in the smallest of thing from buying groceries to planning for your dream asset purchase. So it’s high time one started looking into the consequences of inflation.

Impact of Inflation on your Investment & Savings:
A basic example would explain the impact in simple ways, say you invest Rs. 100 for a year with an interest rate of 8%, so after a year your income would be Rs.108 but at the same time if the prevailing inflation rate was 10% then the cost of any commodity you purchased last year for Rs.100 would now cost Rs.110. This means that your earnings will fall short by Rs. 2 in future to meet your expenses.

Options to combat the soaring inflation:
The most common way people in India opt for fighting inflation is investing or buying gold. The traditional option is seen as the safest & preferred option as a hedge against inflation. However, given the current sudden fall in gold prices, it is certainly not the only option to bet against the inflation.

A systematic financial plan which also takes into consideration the impact of inflation on investments in future is needed to sustain your living expenses comfortably & achieve your financial objectives in future. Stay tuned in to know more about the various plans to consider for investments in our next blog.