I never had any idea about inflation until recently. The prices of commodities started reaching north in a stupendous fashion and I was left with no choice other than to live with it. Inflation is nothing but the percentage fall of your money/buying power i.e. today I can buy for Rs. 10 a loaf of bread and in a week’s time with the same amount of money Rs. 10 I can buy just half the loaf of bread. Here inflation is 50% i.e. the value of money has fallen by 50%.
When I invested money for the first time in market, I did not think of all this inflation and taxes and all that. But now, I have to think over all this. Since it does not make any sense to struggle for money and when I get them they don’t have any value. Consider I have invested Rs. 100 a year back and I have made a cool profit of Rs. 30 and in that the taxes are Rs. 10 and inflation is 20%. Effectively I am not making any profit.
Whenever investment is made, any form investment care has to be taken so that the inflation and taxes are met and we are making a profit which can suffice this condition. We should not earn less than taxes and inflation since it will have no meaning. If at all the money is invested and profit is booked. Government lays its hand to ensure it gets its share of money and inflation at other end reduces your buying power. You could have just kept the money in bank where you could have at least bet the inflation with the interest provided.
Think properly before investing your hard earned money. This is the right time to start your investment planning rather than in the month of Jan. This is what usually happens. Better plan your financial future now than to be sorry later.
I never had any idea about inflation until recently. The prices of commodities started reaching north in a stupendous fashion and I was left with no choice other than to live with it. Inflation is nothing but the percentage fall of your money/buying power i.e. today I can buy for Rs. 10 a loaf of bread and in a week’s time with the same amount of money Rs. 10 I can buy just half the loaf of bread. Here inflation is 50% i.e. the value of money has fallen by 50%.
When I invested money for the first time in market, I did not think of all this inflation and taxes and all that. But now, I have to think over all this. Since it does not make any sense to struggle for money and when I get them they don’t have any value. Consider I have invested Rs. 100 a year back and I have made a cool profit of Rs. 30 and in that the taxes are Rs. 10 and inflation is 20%. Effectively I am not making any profit.
Whenever investment is made, any form investment care has to be taken so that the inflation and taxes are met and we are making a profit which can suffice this condition. We should not earn less than taxes and inflation since it will have no meaning. If at all the money is invested and profit is booked. Government lays its hand to ensure it gets its share of money and inflation at other end reduces your buying power. You could have just kept the money in bank where you could have at least bet the inflation with the interest provided.
Think properly before investing your hard earned money. This is the right time to start your investment planning rather than in the month of Jan. This is what usually happens. Better plan your financial future now than to be sorry later.
Engineer's Finance 