Why Your Money Loses Value Over Time?
You've probably heard your parents say,
"In our time, petrol was ₹20 a litre!"
Why Your Money Loses Value Over Time?
You've probably heard your parents say,
"In our time, petrol was ₹20 a litre!"
Or maybe you've noticed your monthly grocery bill slowly creeping up — even though you're buying the same things.
That's inflation in action - quiet, constant, and unavoidable.
It doesn't steal your money overnight. It does something worse - it reduces what your money can buy over time.
Inflation simply means the rise in prices of goods and services over time.
As prices rise, the purchasing power of your money falls.
Put simply - ₹1,000 today won't buy you as much next year as it does today.
For example:
If inflation is 6%, something that costs ₹1,000 this year will cost ₹1,060 next year.
If your money isn't growing at least as fast as inflation, you're actually losing wealth, even if your balance looks the same.
| Item | Cost in 2010 | Cost in 2024 | Increase |
|---|---|---|---|
| 1 litre petrol | ₹55 | ₹105 | +90% |
| Movie ticket | ₹120 | ₹350 | +190% |
| Family dinner | ₹600 | ₹1,600 | +166% |
| 1-year college fee | ₹50,000 | ₹1,50,000 | +200% |
That's inflation - gradual but powerful.
Your savings lose purchasing power:
₹1 lakh kept in a savings account earning 3% interest actually shrinks in real terms if inflation is 6%.
Long-term goals become costlier:
The ₹10 lakh you plan for your child's education today might need ₹20–25 lakh in 15 years.
Cash and low-yield deposits underperform:
Keeping large sums idle or in low-interest accounts doesn't protect you - it silently erodes value.
It gives a false sense of safety:
You think you're preserving wealth, but you're just slowing down its decline.
Inflation doesn't rise evenly across categories. While some items like food may rise moderately, others — especially medical expenses and education — rise at a much faster pace. Medical inflation in India has consistently stayed around 10-14%, far above general inflation. (GI Council) (https://www.gicouncil.in/news-media/gic-in-the-news/bridging-the-gap-unlocking-the-potential-of-health-insurance-in-india)
Education costs often double every 6–8 years, making them one of the fastest-growing household expenses. (Business Standard) (https://www.business-standard.com/finance/personal-finance/education-costs-double-every-6-yrs-how-to-beat-inflation-and-invest-for-your-child-123072600265_1.html). This uneven rise means everyday living costs and long-term goals grow unpredictably - and often faster than expected.
This is especially critical when planning for long-term goals like retirement. A goal that is 20–30 years away can become dramatically more expensive due to sustained inflation. Your retirement corpus cannot be based on today's expenses alone - it must account for much higher costs in the future, particularly in healthcare, which tends to rise significantly as we age.
Invest, don't just save.
Put your money in instruments that offer inflation-beating returns.
Match your goals with suitable investments.
For short-term needs, choose low-risk avenues. For long-term goals, consider such asset class which tends to outperform inflation over time.
Diversify your portfolio.
A mix of asset classes — equity, debt, gold, and real estate — balances growth and stability.
Start early and stay consistent.
Compounding works best when your money has time to grow and fight inflation naturally.
Review your portfolio periodically.
Reassess returns vs inflation annually to ensure your investments are keeping pace.
If inflation averages 6% a year -
Your money halves in purchasing power every 12 years.
That means ₹10 lakh today will buy only what ₹5 lakh can, 12 years later.
Inflation doesn't just make things expensive - it makes inaction costly.
Final Word: You Can't Escape Inflation — But You Can Outsmart It
Inflation is like gravity - it pulls down your money's value whether you notice it or not. But with smart, goal-based investing, you can rise above it.
Be an Atmanirbhar investor. Don't stop at savings - ask "Is my money holding its value against inflation?"
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