What is inflation and what is its impact on the financial plan?
Inflation is the silent killer, which eats the value of your money – without you realising it. In other words, it’s the increase in prices that we all talk about. For example, if the inflation is 6%, you need to pay Rs.106 to buy a commodity that would have cost Rs.100 a year ago. (Remember the rise in the price of a movie ticket back from your college days to now – that is inflation). So if you put all your money in savings account when inflation is 6% and you earn 4% interest you are losing 2% every year, that too before taxes on the interest.