Understanding Inflation

Investing in equities can help you beat inflation better than other asset classes and provides positive real returns over the long term.

Real Value of ₹100 will become ₹11.34 in 30 years at inflation of 7% p.a.

Understanding Inflation

Source: Ministry or Petroleum. Indian Oil corporation website. Petrol costs as on November 15th 1990 and 15th October. 2018 In New Delhi. The price of milk is the available market price in Mumbai region on 15th October. 2018. Atta prices as of 15th October. 2018 from a leading online distributor.

Inflation sinks your purchasing power.

  • Hence, today’s money will not buy you the same things tomorrow.
    E.g. 1 Litre of milk which used to cost 36 in 1990. costs 345 today (2018).
  • Over the last 5 decades CPI Inflation in India has averaged at 7.96% per year.*

A few specific examples above show how small increases over time end up increasing costs dramatically.

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Small sacrifices can make a huge difference

By cutting down a mere Rs 1500 on your entertainment bill each month , investing the same annually, you can accumulate a corpus of Rs. 1.82 cr. at the end of 36 years

“Do not save what is left after spending but spend what Is left after saving.” – Warren Buffet

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