Inflation is a fact of life for everyone. If you spend roughly 60,000 rupees a month, can you imagine what that will be in 10 years’ time? At a rate of 7-10% inflation, you would require around 1.44 lakh rupees to continue living the same lifestyle. That’s nearly double! If you’re saving 10,000 rupees today, its worth might decrease to merely 5,083 rupees, due to loss of purchasing power, in 10 years. These are not scary numbers—these are a wake-up call based on the latest Consumer Price Index (CPI) trends, which have remained above 7% for over six months, thus breaching the Reserve Bank of India’s (RBI) 2-6% tolerance band.
From groceries to your children’s education, prices have increased by more than 7 percent in just the past year. If the central bank is unable to tame this trend, prices could keep going up even more. You can’t prevent inflation, but you can get your financial house in order. The key? It is, therefore, wise to enter a diversified portfolio to help you beat inflation in the long run and ensure your future. Here’s how.
Rethinking Your Financial Plan
The financial experts told us to prepare for higher costs, particularly in health care, education, and lifestyle spending. You make more money; you want more things, but so do your grocery bills and travel expenses. Here are three tips from the experts to get you on the right track:
- Invest More Than You Think You Can: Do your best to stretch your budget and prioritize saving and investing.
- Be Conservative with Returns: Avoid overestimating profits in your financial projections.
- Start Early: The earlier you invest, the longer your money compounds.
Best Investment Options to Beat Inflation
Here are some tried-and-true vehicles to protect your wealth:
- Real Estate: A favored asset for times of high inflation, real estate provides for increased rentals. You can purchase property outright or invest in specialized funds.
- Commodities: Physical assets such as gold do well during inflation. Access gold through ETFs or gold mutual funds.
- Inflation-Indexed Bonds: These bonds pay you returns over and above the inflation rate, ensuring that your savings continue to retain their value over time.
- Stocks: If you own value stocks, which tend to gain along with inflation, you have a hedge against rising prices.
You can’t do anything about inflation, but you can do something for your financial future. Plan now for a safer future.
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