Impact of Inflation on Savings

The aim of any investment is to beat inflation because with inflation the value of money erodes over time. If the current cost of buying a 1 lt. of milk is ?50, in 10 years time the same 1 lt. of milk will cost you ?111 if the rate of inflation is 8%.

So, whil investing your aim should be to earn a return that is greater than the rate of inflation. Say, you put your money in a bank account that pays you interest at 7%. A year later, you will have 7% more money. However, if inflation is more than 7%, it will purchase less than the amount that you began with although you have more money in your pocket.

If your goal is to multiply your savings, you need to invest it so that the interest or profit you earn is higher than the rate of inflation. Thus, to become wealthy, all you need to do is invest to beat inflation and do it regularly over time in line with your financial plans!

To avoid the risk of make uninformed, wrong and implusive decisions, it is in best interest to have a #financial consultant. Just like we have doctors for illness, lawyers for legals, CA for returns, financial consultants are off prime importance to preserve and grow wealth. Never cut corners here it is too risky in the long run.