Rate of Inflation has been rising continuously from the past couple of years in India. ‘Inflation rate’ has affected the lives of consumers, policy makers and the government officials because it has a great impact on stakeholders in the economy in different ways. Out of these three people affected, consumers have been hit the most which in turn hits the policy makers and people in the government.
As for investors, most of them don’t realize the impact of inflation rate but investors can be affected by inflation rate in different ways especially for long term investments. The unawareness about this fact leads to low returns, hence, it is a mandate to know how it affects you and ways how you can beat it. You can get details on investment during inflation by clicking on the link below.
Talking about investments, there are several things you look into before investing such as safety, capital, returns and liquidity. Amongst all these factors, people tend to forget the most important one i.e. inflation rate. However, in a country like India, debt instruments are most affected due to the economic conditions (inflation rate). But there is a solution to everything; indexation is a concept that is a must to know in such situations. But, the benefit of indexation applies to only long term investors.
To safeguard short term, we need to opt in for fixed income investments. Short term investments like monthly income plans is always a good idea during inflation. This is also a tax efficient way to invest as gains from all investments for over one year are tax free. The idea is to hitch onto something that is already going up with inflation. Also, you will not find this tough as the value of services and goods is always going up during inflation.
