How can I Beat Inflation?

Inflation: The simple meaning is money loses purchasing power over time.

You might notice that when you were younger you can buy more toffies for less money. But today you have to give more money to buy the same toffies. The purchasing power of money decreases every year gradually.

Your Basic Saving Account Don’t Beat Inflation.

When you work hard and make money and keep your money in a saving account for future use. But that saved money can not beat Inflation.

The average interest rate on your saving account is around 2 to 3% or even less. Varies from bank to bank.

The question remains the same “How can I beat inflation?”

Answer — You can beat inflation by simply investing your money in the assets where you can get more return than the inflation rate.

Then the question comes where to invest your money to beat inflation? Here is the answer.

Invest in Mutual Fund/ Index Fund

If you are new to the market you can start your investment journey with an Index fund. Invest in an index fund for long period can save you against inflation.

If you want some more returns than an index fund then you can invest in a mutual fund. But while choosing a mutual fund you have to be a good experience or you can contact your financial adviser. Investing in a good mutual fund can help you to beat inflation.

Invest directly in stocks

If you have sufficient knowledge and experience you can your own portfolio by choosing your favourite stocks. While choosing stocks you have to do a fundamental analysis of stocks. You should have enough practice of the stock market while choosing stocks.

The stock market will typically return ~5–8% per year,

inflation is typically 1–2% per year.

So in a general sense, the stock market will, over longer periods of time, always beat inflation.

Invest in Gold

Gold is nothing but peace of rock. But it is still attractive to many investors. It can help you to beat inflation. Allocate a small amount of gold in your portfolio.

Invest in Real State

So may people crating their wealth by working full time in real state. Price of peace of land increasing year by year. You can not miss this opportunity. If you have an ample amount of capital then you can invest your money in the real state. It can give a nice return per year.

Invest in the Geographically Diversified portfolio.

If you invest only in one country then there is fear of crashing the economy of a particular country. If you diversify your portfolio by investing money in different countries then you can easily beat inflation. For example, if you are a resident of India then you can invest your money in different economies like the USA, London, etc.

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Yadav Patle

Yadav Patle

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Civil Engineering Graduated from Priyadarshini College of Engineering Nagpur. Stock market investor and Forex trader.