Inflation: The Silent Tax on Your Future Purchasing Power

Inflation is the decrease in the purchasing power of money, reflected in a general increase in the prices of goods and services.

The Rule of 72 for Inflation

Divide 72 by the inflation rate to see how many years it will take for your money to lose half its value. At 6% inflation, your ₹100 today buys only ₹50 worth of goods in 12 years.

Real Returns vs. Nominal Returns

If your bank gives you 7% interest but inflation is 6%, your 'Real Return' is only 1%. If you pay tax on that 7%, your real wealth is actually shrinking.

Hedging the Leak

Asset classes like Equities and Real Estate are 'inflation-protected' because businesses can raise prices and rents typically trend with inflation. Cash under a mattress is a guaranteed loss.