The Shrinking Value of Money Inflation, or 'mehengai,' is the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power of currency is falling. In simple terms, your money buys you less today than it did yesterday.

How Does Inflation Affect You? Let's say inflation is 6% per year. * A product that costs ₹100 today will cost ₹106 next year. * If your savings are in a bank account earning 3% interest, the real return on your money is actually negative (-3%). Your money is losing its purchasing power.

Why Your Investments Must Beat Inflation To grow your wealth, the return on your investments must be higher than the rate of inflation. This is known as earning a "real rate of return."

**Real Rate of Return = Investment Return - Inflation Rate**

If your investments are not beating inflation, you are effectively get poorer over time.

Investments That Can Help Beat Inflation * **Equities (Stocks):** Historically, equities have provided returns that are significantly higher than inflation over the long term. Investing through mutual funds is a good way to participate in the stock market. * **Real Estate:** Property values have also tended to rise faster than inflation over long periods. * **Gold:** Gold is often considered a hedge against inflation, as its price tends to rise when the purchasing power of currency falls.

Key Takeaway Don't let inflation eat away your hard-earned money. Keeping money idle in a low-interest savings account is a losing strategy. Invest in assets that have the potential to deliver inflation-beating returns to achieve true wealth creation.