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Meaning of Inflation - Understand this, otherwise you will be poor.

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Meaning of Inflation - Understand this, otherwise you will be poor.

It is the mentality of Indian investors that whenever they invest, they must first have the security of that investment. That is, whatever money they invest, whether money should be invested anywhere, right after decades, at least they have been invested, Amount should be met again and Indian Investor years to get that Invested Amount Can wait.

Whereas the truth is that over the period, due to inflation, the Purchasing Power of money decreases. Therefore, if the money invested could not grow even with the minimum inflation rate for a long time, then there would have been indirect losses on that money in a way and this indirect loss is only referred to as Inflation or Inflation. We do.

Let's try to understand by an example how Inflation transforms one or the other growing or less growing investment indirectly into a deficit.

Generally most Indians are financially illiterate, so when they have some extra savings, even after finishing all the needs and desires, some money is saved, instead of having a bank FD or property, they can save that savings somewhere And there is no sense about investing.

So suppose that after the implementation of 6th Pay Commission recommendations 8 years ago, you got some extra money and you still got some money after paying all types of expenses, out of which Rs 1 lakh you bought a plot But, after 8 years, if you try to sell that plot today, then no customer wants to give you more than 1 lakh rupees of that plot. Which means that the value of your Plot is still the same as it was eight years ago.

However, if you had deposited those same Rs 1 lakh in Fixed Deposit at 9%, then today they would have become one lakh rupees and 2 lakhs. That is, indirectly, you have raised Rs 1 lakh in last 8 years and if for the next 8 years, that price of your plot is only 1 lakh, then after 8 years you will have indirectly lost 3 lacs Because if you deposit the same Rs 1 lakh in bank FD at the rate of 9% per year, then in 16 years your bank FD would have matured twice.

This is inflation, which means that your savings will eat slowly without your knowledge, and this only happens because you think that the money invested in the property will be at least equal to returning. That is, in whom you have bought it, the truth is that if you sell your purchased item only after one year, at the same price you bought, even then indirectly you would have a loss of about 8 to 10%Because the real inflation rate of our country is around 8 to 10% which means that you are getting Rs 100 today, in the next year you will have to pay at least 110 rupees to buy the same thing as one year after you Purchasing power of Rs 100 will be reduced to Rs 90.

This Inflation is, in fact, like a middleman who gradually hides the Purchasing Power of your saved money completely. Therefore, whenever you save some money, while investing your remaining money, it is important to keep in mind that you are not investing in a place that is not able to save your money from inflation.

For example, if you keep your remaining money in your Saving Bank A / c, on which you get an interest of 4% per annum, then indirectly you need to deposit at least 6 % Are paying interest because if you keep 100% of your savings in Saving Account for 1 year, you will get a total of 104 rupees including interest after 1 year, but 10% inflation has increased in the same year.

As a result, what you can buy for Rs 100 today, next year, you will have to pay 110 rupees to buy the same thing, while keeping the money deposited in Saving Bank A / c for 1 year you will get only 104 rupees, i.e. 1 Year after that you will have to add more than 6 rupees in your pocket to buy the same thing. So if you keep all your savings in Saving Bank A / c, then it is better that you spend it today. At least you will get the happiness of those money because by depositing those funds in Savings Bank A / c, you are giving indirectly interest to the bank about 6% interest to keep your money deposited in the bank.

There are other ways to beat Inflation, but if you do not know about them, at least pay your deposits in your Saving A / c, which should be paid to you at least in the next 3 months. It is not necessary that you get the interest of at least 7.5% annually on that and in return for keeping your money deposited in the bank every year, you only have to pay the indirect interest of 2.5%.

Those who do not understand the effect of Inflation properly, they are engaged in the same venture that their normal needs may not be fulfilled. You may have also realized that you start saving for the financial goal that Achieve when you reach near that Goal, then you know that your same goal has now become further away from you and it happens. Just because of not understanding the effect of inflation.

Suppose, for example, you decided that after 5 years you will get 1000 Sq. Ft. Is to buy a plot, which costs around 5 lakh rupees. You started saving 1 lakh every year, about 8500 rupees per month. After about 5 years, you got 5 lakh rupees but when you bought that plot for which you had collected 5 lakh rupees then you came to know that the value of that plot is now almost 7.5 lakh.

That is, you can not buy that plot even after 5 years because you still do not have enough money and there is only one reason for this to happen: Inflation, because if you had any sense of inflation, you would have already anticipated that The plot which is found in 5 lakhs today, will be found in about 7.5 lakhs after 5 years, so you plan to save 5 lakhs but not 7.5 lakhs. However, if you understood how to work for money, that means you are financially literate, then you do not even need to wait for 5 years, but you should first build your house and pay money in the next 5 years and not even 7.5 lakh Less than that

If you do not understand the effect of Inflation properly, you can never achieve any of your Financial Goals because you have to make Proper Planning to Achieve any Financial Goal and without including Inflation, Can not plan, which is successful.

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