How can you beat inflation

Invest in yourself and be the best at what you do

One of the most effective strategies to sustain your purchasing power over time is to invest in your own talent. The best surgeon or lawyer in a city or town benefits from an education paid for in “old rupees” but is able to price their services in “current rupees” without having to re-educate themselves.

Consider adding a new skill to your résumé by using internet resources or enrolling in a local institution. Advanced degrees can be costly, but they can also help you expand your knowledge base and make you a valuable employee in the future. Over time, increasing your worth to your employer and its clients will help you command a fair portion of the profits.

Limit your wants

Not having a lot of stupid needs in your life is one of the best defenses against being concerned about inflation.

Stay away from traditional bonds and fixed/recurring deposits

If inflation is around 8% and if your investment earns 7% returns then your wealth is getting eroded. You are actually not making any money. You can definitely consider investing in a FD / RD, if your financial goal is a short-term one and preserving the capital is your utmost priority.

Invest in good businesses with low capital needs

During inflationary periods, businesses with minimal capital requirements that can retain their profitability should perform better than others that must invest more money at ever-increasing prices just to stay in operation.

Look for companies that can raise prices during periods of higher inflation

Pricing power is the single most significant factor to consider when analyzing a firm. If you have the ability to raise prices without losing customers to a competition, you have a very good business.

During periods of high inflation, a business that can raise its pricing has a significant advantage since it can offset its own rising costs.

For example, a toll bridge would be the best asset to own because you would have already built the bridge and could raise prices to balance inflation.