Saving money is harder than earning it, and harder than saving is keeping the value of saved money always ahead of inflation!! Inflation, yes, the change in the price of a commodity over time. It decreases the value of money over time. For example, if today you are buying 20 commodities for Rs 100, obviously after a couple of years the value of money will be the same but the number of commodities that you will get for that much money will be less.
Inflation diminishes the value of money with time and beating inflation becomes a priority with the saving of money. But alone saving cannot help you beat inflation, thus an individual need to invest their money at a proper place where it grows to its potential and helps him inflation over time!!
Let us know how one can beat inflation over time!!
What Does “Beating Inflation” Mean?
Beating inflation simply means saving and investing your money in such a way that you earn higher returns than the inflation rate in the economy.
Let us understand it through a simple example:
Suppose you saved Rs 100 and kept it in your saving bank account that offers you a 4% interest rate, which means next year the value of your money becomes Rs 104. However, the inflation rate in the economy is 5%, so basically, here the growth percentage in your money is less than the inflation rate, thus your money lost its value.
However, when you instead of only saving, also invest your money in a good financial instrument, it will definitely offer you a return rate that will help your money grow more than the inflation rate in the economy.
Due to various reasons, the purchasing power of money decreases significantly every year. As a result, the price of commodities increases every day. This economic phenomenon is called inflation.
How To “Beat Inflation”?
Saving alone can not help an individual to make their money grow more than the inflation rate in the economy. Thus, they need to put or invest their money at a place or financial instrument that has a greater chance of being equivalent to or more than the rate of inflation tomorrow.
While picking out the best financial product for inflation protection, do your part of research in the best way, do consider your goal and risk holding factor, and third, do take consultation from an expert into consideration. It's completely okay and best to seek financial advice from an expert.
A piece of advice that always comes in handy: ‘Do not put all your eggs in one basket. A few investments may appear to give really high returns, especially equity-oriented investments but they also come along with higher risk levels. Diversify accordingly, keeping in mind your goals, risk levels, and inflation.
Here are some financial products that help beat inflation while investing and letting your money grow to its full potential.
Investing In The Stock Market!
Stock Market investment or Share Market Investment being a market-linked investment helps an investor earn returns that have inflation-beating capacity but in the long-term. In the shorter term, there are many ups and downs and volatile situations, while secondly, it is too risky for a beginner. Thus, it is advised to invest in the stock market only when you have done proper research and can overcome the short-term volatilities in the market easily.
Equity Mutual Funds!
For investors who do not want to invest in individual stocks can look at equity mutual funds. There are different sub-categories in equity funds as well that can suit the requirements of different kinds of investors. There are equity funds on the basis of market capitalization, sectoral funds, equity funds based on investment strategies, tax-saving funds, and more.
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For any kind of query you can contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.
(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).