How Inflation EAT your Savings
INFLATION is used among most people. Some may know it in full or others may be confused about 'What' and 'How' Inflation is. Just Look. In the year 2013, the Cost for 1 liter of Milk was Rs.34(INR 34) where whereas in 2023 it marked Rs.54(INR 54).10 years, Rs.20 hike. Not Unusual You May Think. Read how it affects our Savings.
Assume a Family of 5 Members consumes 1 Liters of Milk every day in the Year 2013, each member will get 200 ml of milk every day. As Consuming milk in varieties is a traditional practice of every household in India, it will be a regular practice.
As it is regular, the family may consume the same quantity and amount in the year 2023. The cost they allocate Rs.34 to purchase Milk, and they get approx. 630 ml and the share per member will down to 126 ml per person. I.e. 74 ml shortage per person.
It is quite unfortunate to settle with less portion as Milk is essential for a Healthy Mind and Body. To satisfy the need for milk, that family has to spend Rs.20 daily in excess, and Rs.7300 in a year additionally will seriously affect the savings if they cannot improve the earnings according to times. You will be more serious about this when the percent-wise increase of One Litre of milk over 10 years is 59%
What Is Inflation?
In a simple sense 'Inflation' is a rising cost for Commodity and Services. The table below shows the Inflation chart from 1960 s onwards.
Source: Macrotrends
Table Below Shows the Value of Rs.1 Lakh Expence, After 20 Years
| YEAR | EXPENSE AMOUNT |
| Start year | ₹ 1,00,000/- |
| 10th year | ₹ 1,68,948Year/- |
| 20th year | ₹ 3,02,560/- |
Table below shows the value of savings amount Rs.1 Lakh after 20 Years
| YEAR | EXPENSE AMOUNT |
| Start year | ₹ 1,00,000/- |
| 10th year | ₹ 57,299/- |
| 20th year | ₹ 30,862/- |
Expenses will rise and the savings will reduce.
How to Check Inflation?
To check and Compete with Inflation there are Various ways. Some Prudent ways are discussed below.
Investment Strategy: A strong Investment Strategy is the key to Financial Success and Safety. Investment in various Instruments which is capable of challenging investment is needed.
Inflation Indexed Investments: Fund your portion of savings in Long Term Inflation Indexed instruments. This will counter Inflation and inflation-appropriate returns.
Diversified Portfolios: While traditional investments provide convenience and secured returns, It is not viable to put all your savings in such portfolios alone. The evil of Inflation in a new economic scenario needs advanced and Proven Instruments to compete. Market Linked Instruments such as Mutual Funds Equity etc, will Satisfy Long Term Financial Goals.
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