Purchasing power reduces due to increase in inflation rate. (file)Image Credit source: Getty Images
In today’s time, everyone is worried about their future. Be it buying a house, children’s education or worrying about daughter’s marriage. People spend every penny for all these things. People think that after 20-30 years they can easily fulfill their needs by accumulating Rs 1 crore. If you have all this in your mind then this calculation can change your thinking. This is because the value of rupee also decreases with time. Even though today Rs 1 crore may seem sufficient to us, but after about 20-30 years from now the value of Rs 1 crore will not be that much.
Yes, the way inflation is increasing, it is reducing the value of money and if proper investment is not made then your savings will be much less than expected. Today we will know what will be the value of Rs 1 crore after 25 years i.e. in 2040? Why does this value decrease? Where can one invest to maintain the right value of money?
How much of its real value will be left by 2040?
The prices of things increase every year. Like food items, house, car, medicines and other necessary things. When these prices increase, less goods are available for the same money. This is inflation. In India, inflation has been around 5% to 7% for the last several years. If the average inflation rate is assumed to be 6%, then according to the inflation calculator, the future cost of Rs 1 crore should be around Rs 2.39 crore. This means that in 2040, the value of today’s Rs 1 crore will be approximately equal to today’s Rs 4045 lakh. This does not mean that the rupee will decrease. This means that you will have to spend Rs 1 crore in 2040 to buy the goods that you can buy for Rs 4045 lakh today. If you understand it in another way, then in 2040 you will have to have Rs 2.39 crore to buy the same item which you can buy for Rs 1 crore today.
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What is inflation and why does the value of rupee decrease?
Inflation means increase in prices of everyday goods and services. When the prices of goods increase, the purchasing power of the rupee decreases. Every investor makes his savings and investments so that his money grows over time and his future needs can be easily met. But external things like inflation rate have a big impact on your savings. Due to increase in inflation, things become expensive and your purchasing power (buying ability) reduces. Most people keep money in the bank so that they can keep getting interest, but sometimes the bank interest does not increase so much that the effect of inflation can be completely covered. Besides, the impact of inflation also depends on the type of your investment. Returns on different investments may change depending on inflation.
This is how the value of rupee will increase through investment
How to prepare to deal with inflation?
Inflation will always be a part of the economy. The government tries to control it, but it has no effect. Therefore, the person himself should prepare in advance. Inflation can be defeated with right investment and good financial planning. Like investing in stocks and mutual funds. These often provide returns that are higher than inflation. However, it is important to keep in mind that these also involve risks, which can also lead to losses. Therefore, include different types of investments in your investments and choose options that give good returns in the long run. By doing this the effect of inflation can be easily tolerated.