"Inflation jumps to 7.31 in Dec" -------- Does it make any difference to you and me? The answer is Yes.
This is the rate at which price rise. All commodities, will rise by some percent in coming months. This is not the only impact, it has it's impact on your fixed earnings as well.
Suppose, you opened a FD in a bank at 6.25% PA. You will get 106.25/- for every 100/- saving after an year. But, if inflation goes at the same rate, rupee value will erode at the rate of 7.31%. The stuff, you were getting at RS 100/- will be available at RS 107.31/- after an year. Whereas you FD will fetch only RS 106.25/-. The effective returns will be less than actual returns after paying TAX on the returns.
What needs to be done to keep the pace with inflation?
-You need to identify the sources, having more returns as compared to inflation rate.
-You need to take bit higher risk and aim for high returns.
This is the rate at which price rise. All commodities, will rise by some percent in coming months. This is not the only impact, it has it's impact on your fixed earnings as well.
Suppose, you opened a FD in a bank at 6.25% PA. You will get 106.25/- for every 100/- saving after an year. But, if inflation goes at the same rate, rupee value will erode at the rate of 7.31%. The stuff, you were getting at RS 100/- will be available at RS 107.31/- after an year. Whereas you FD will fetch only RS 106.25/-. The effective returns will be less than actual returns after paying TAX on the returns.
What needs to be done to keep the pace with inflation?
-You need to identify the sources, having more returns as compared to inflation rate.
-You need to take bit higher risk and aim for high returns.
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