Classic example of inflation when I bought MILK today morning….
Amul hikes milk price by 2 rupees per liter recently…
Rate in March 2007 per liter after 2 rate hike in 2006…
Milk price of AMUL
Today’s rate (March 2017)
Milk price (INFLATION) increased annually between 10 to 11%
Your bank FD, Insurance investment, Gold and Real estate can’t beat this inflation ( 5- 6 % tax free return of such investment)
Your return (5%) – Inflation (10%) = 5% LOSS on your Investment
My Finology always reminds you that INFLATION is the biggest risk in the world.
Do you know the PROFIT or LOSS of company like AMUL?
The profit of this business is more than inflation (15-20%). You should buy this business via equity investment.
There are many good businesses (like banking, software, petroleum, pharma, hospital, auto, consumer and many more) which beat inflation significantly. For that you have to buy equities so that you become a partner of that businesses.
But how do you find such good businesses?
It’s not your cup of tea but YES , It’s a job of Mutual Fund’s fund manager.
Conclusion of this example….
You must invest via mutual fund to beat inflation ( 12-15% tax free return)